To celebrate Women’s Month, we feature trailblazing women in financial services, exploring their stories, insights and impacts on the industry.
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EMPLOYEE BENEFITS
Employee benefits boost job satisfaction, retention and productivity. We explore options and look at how better benefits foster loyalty and positivity. Cover story + pg 16-1 9
BEHAVIOURAL FINANCE
Psychological factors influence financial decisions, often causing irrational choices. We explore their impact and strategies to manage clients driven by emotions.
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INSURANCE TRENDS
Take a look at the latest insurance industry trends, challenges and innovations, with insights from experts on emerging risks and technology transformation.
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Employers must adapt to keep up with changing workforce
BY SIOBHAN CASSIDY MoneyMarketing Contributor
Agility is often demanded of the modern employee. Now it is the turn of employers, who must rethink Employee Benefits (EB) as they try to find ways to turn the tide on the increasing and expensive plague of absenteeism, presenteeism and even resenteeism.
Absenteeism costs the economy millions of rands in lost productivity. Dr Themba Hadebe, Clinical Executive at Bonitas Medical Fund, says, “Occupational Care South Africa reveals that absenteeism costs the South African economy around R12bn to R16bn per year, whereas the Human Capital Review estimates it to be even higher, at R19.144bn. This equates to about 15% of employees being absent on any given day – a productivity killer that is affecting both small businesses and large companies across the country.”
Presenteeism – where workers who are unwell go to work – introduces its own risks and costs. Sick workers make mistakes, they get sicker, and they put
infection. Dr Hadebe explains that a third problem, resenteeism or ‘quiet quitting’, refers to employees who are disengaged and unhappy. “Doing the bare minimum due to burnout and feeling underappreciated, they stay at their current job due to financial constraints, but are unproductive.”
Disengaged employees a problem
Meeting the ever-changing needs of today’s dynamic, diverse workforce requires an agility that won’t come naturally for many institutions. The consequences of doing nothing are already playing out. According to the latest Gallup State of the Global Workplace report, 71% of the South African workforce is disengaged. The report also found that 56% of South Africans were looking for another job, or at least keeping an eye out for opportunities.
The workplace has changed a lot since Covid-19, with the increase in remote working and even those at the office
demanding more autonomy and more support. Also, the Great Resignation after the epidemic started the trend where workers leave jobs that make them unhappy, even if the chances of finding replacements look slim. “The value of experienced and motivated employees should not be underestimated, nor the cost of replacing staff who leave,” says Reo Botes, Managing Executive at Essential Employment Benefits, adding, “By actively engaging with staff, tailoring benefits to specific income levels, and adopting a thoughtful, inclusive approach, organisations can create rewarding employee benefit programmes that not only enhance employee satisfaction but also contribute significantly to the overall success of the business.”
Why benefits are essential
Belinda Sullivan, Head: Consulting Strategy Retirements at Alexforbes, agrees that a proactive, thoughtful approach will pay dividends for employers. She describes employee benefits delivery as “an interconnected framework” of providing employees with benefits, which creates a “corresponding improvement in engagement and productivity, leading to improved profitability for the employer”. While the standard EB offering of retirement fund membership and group risk cover, and sometimes membership of a medical aid, was enough in times gone by, progressive modern employers are offering a range of benefits and incentives to attract and retain talent, and keep staff engaged.
“As the world we live in changes, what employees find value in also changes. While the pandemic may have accelerated the pace at which things changed, change was already happening,” says Melissa Ramsamy-Agapitus, Executive: Group Risk & Investments, Liberty Corporate Benefits.
“What is important to an employee has certainly changed over time. The exciting and attractive employee benefits that worked 20 years ago may not necessarily work for all the employees today, let alone those of the future.”
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Personalise the benefits
Tailoring of these offerings, often with the help of AI, is another way that businesses can stand out as employers of choice. “Employers should view personalised benefits as a strategic investment, balancing the resources needed with the long-term gains in workforce performance and loyalty,” says Botes. He adds, “AI can enhance and support these processes by analysing data, providing predictive analytics, personalising benefits, automating feedback collection, real-time reporting thus optimising costs. AI’s capabilities allow for real-time insights and proactive adjustments, leading to more effective and satisfying benefits programmes.”
Ramsamy-Agapitus adds, “A business is built on the backs of their employees. At Liberty Corporate Benefits, we believe that ‘better benefits are better for business’ – if you treat your employees well, they will treat your business well, which will impact on how your customers engage with you and drive your business’s success.”
strategies and tactics to discover what their customers want and need. They would do well to turn these often highly focused, data-driven processes onto the issue of staff engagement. Testing employee benefits and making continuous improvements could ideally be treated in the same way that finessing a new campaign or sales process is. “In today’s challenging business landscape, success hinges on employee engagement as much as it does on customer satisfaction,” says Kinola Pather, CEO of Randgo, bespoke customer, incentive and employee rewards provider. “Staff incentive programmes have emerged as pivotal tools for fostering engagement, rewarding transformation, driving productivity and nurturing both individual and organisational growth.”
Education is essential
ED’S LETTER
W“The value of experienced and motivated employees should not be underestimated, nor the cost of replacing staff”
You get what you give Gallup, which examines decades of employee engagement and performance data from more than 100 000 teams to evaluate the connection between employee engagement and 11 key business outcomes, estimates the cost to the global economy of poor employee engagement as $8.9tn, or 9% of global GDP. RamsamyAgapitus says, “As an employee, your job is just one of several things that demand your attention. Part of your focus is also on the safety of you and your loved ones. Good employee benefits provide reassurance to employees about some of the things that can detract from them being fully present.”
With employee engagement falling and workers leaving jobs in the middle of economic uncertainty, employers must work hard to retain their staff, especially top performers. Pay scales count but the source of lasting loyalty to an organisation is often something deeper. Employers have long finessed
Another key aspect not to be forgotten is educating employees about resources offered so that they can make informed decisions and maximise the value of benefits. NMG Benefits has gone as far as launching a division, M1, that helps employers assist employees with benefits. Lettesha Pillay, Head of Sales and Business Development at NMG, says “Often people have benefits, or employers have this amazing benefit landscape, but the mark is missed when staff don’t know how to access the benefits.”
The M1 team engages with employees from inception, guiding them on benefits available and decisions on, say, medical aid choices and retirement savings options . The service includes guidance on budgeting, saving, will-writing, and other aspects of an employee’s life into which benefits can be integrated.
Pillay describes the M1 service offering as a “prequel to a financial adviser”. She says, “A lot of people will say, ‘I’m not earning enough to go to a financial adviser’, but once they start becoming more familiar with these financial concepts – saving, budgeting, investing for retirement – that triggers the conversation, they are quite likely to realise the value of a financial adviser.”
Noting that “financial freedom comes with education, mentoring and having structures and resources available to staff across all levels of the organisation”, Botes agrees that helping employees to make informed decisions is best practice. He adds, “Here, trusted, registered and licensed advisors or financial services providers are worth their weight in gold.”
16.
e’re focusing on employee benefits in this issue and in times when employee retention, particularly in the financial sector, is crucial, it’s something that all employers should be focusing on. Unfortunately, not all employers recognise the value of those who work for them, which is often detrimental. Since Covid, there’s been a worldwide demand for skilled workers, particularly in certain professions, and when a highly qualified individual is offered a better deal, no matter where in the world, there’s a good chance they’ll accept. The brain drain is real. There are various ways employees can deal with the issue. Wages and bonuses are one thing, but it comes down to more than that. Decent medical benefits, retirement policies and incentives are all important, but there’s an increasing need, particularly from Generation Z, to feel happiness in the workplace. To have a culture that doesn’t engender fear or bullying, that fosters trust and encourages genuine participation. A culture that understands their needs – be it working in a hybrid environment, or having a legitimate process for taking care of mental health issues. It’s all worth thinking about and discussing with your clients.
It’s been an interesting month for many reasons but mostly I’ve been buoyed by the continuing sense of optimism in the air I attended the virtual Bonitas roadshow, which was extremely positive. What struck me the most was the brilliant relationship they have with Gift of the Givers, ensuring they have an organised, structured approach to a private sector/public sector partnership in terms of healthcare. Bonitas is contributing to – and solving – real issues that affect those in the public healthcare system, and it’s working. I also attended an incredibly well-put-together roadshow, The Amplify One Moment Event, featuring speakers from a wide range of companies. The whole event was uplifting and positive. Speaking of, we're focusing on women in finance to celebrate Women's Month and spoke to some women who hold high-powered jobs. The overall feel is that the sentiment towards women in the industry is changing. The glass ceiling is cracking.
Stay financially savvy,
SANDY WELCH Editor, MoneyMarketing
Read more about the importance of employee benefits on page
LAURENCE RAPP CHIEF EXECUTIVE OFFICE R , VUKILE PROPERTY FUND
How did you get involved in financial markets –was it something you always wanted to do?
I’ve always had a passion for financial markets. As a child, I would sit with my grandfather and listen to stock exchange reports on the radio. Investment conversations were common in our household. My father was an accountant and financial adviser, and my extended family on both sides were involved in property. Starting my career in banking and eventually joining Vukile as CEO allowed me to blend financial market strategy with property investment. I’m fortunate to be doing what I love and find myself enjoying it more all the time.
What was your first investment?
The first shares I owned were a birthday gift from my grandparents in a now defunct mining company, Southgo. Today, my professional responsibilities at Vukile take precedence, leaving little time for my own investments. I outsource them to a fund manager who provides the necessary focus. I ask the tough questions, but they make the decisions. This approach also helps avoid any conflicts of interest in the market.
What have been your best – and worst –financial moments?
The pandemic-induced crash, which severely impacted REIT share prices, was the worst. Vukile entered Covid in a strong position, outperforming our peers and favoured by the market. Yet, we suddenly experienced a 75% drop in share price due to an uncontrollable external factor. This underscored the vulnerability all listed businesses face, even when adhering to best practices and sticking to all the fundamentals. It proved that the adage ‘if you run the business well, the share price will look after itself’ doesn’t always hold true.
Guiding Vukile through the pandemic and witnessing the subsequent recovery of our business and share price has been a career highlight. This period crystallised my career, allowing me to leverage my experience to guide a young team through a crisis, helping them emerge as better businesspeople. Moreover, this experience galvanised our team, fostering greater cohesiveness by connecting on a human level during a time of isolation. Our recovery has been exceptional.
“Guiding Vukile through the pandemic and witnessing the subsequent recovery of our business has been a career highlight”
From my early career as an equity analyst, I’ve taken great satisfaction in seeing my market predictions panning out.
Recently, Vukile’s strategic move into Spain, which established Castellana Properties Socimi, unfolded exactly as anticipated. We recognised the potential for a macroeconomic recovery and identified opportunities in a fragmented retail property sector emerging from a double-dip recession. By acquiring and enhancing under-managed assets, Castellana has grown to become Spain’s fifth-largest landlord over seven years, and Vukile has gained first-mover advantages. Given the recovery we foresaw nearly a decade ago materialising, and the excellent performance data available to the market from our investment, others have also started following the Iberian retail opportunity.
Similarly, investing in Lar España we applied our knowledge of the Spanish retail property market to spot a very undervalued stock. The significant appreciation in Lar España’s share price confirms an exceptional and highly profitable investment. At current levels, the shares have gained close to R1bn in value relative to our entry purchase price, which translates to a gain of 45% on a total return basis, and Lar España is delivering a dividend yield of c. 15%.
What are some of the biggest lessons you have learnt in and about the financial markets?
The greatest lesson I’ve learned is to combine the fundamentals of real estate and value investing with a keen eye for unconventional angles that are actionable. That’s my quintessential investment process and it’s what we do at Vukile. As a value investor, I focus on the bottomup fundamentals of a business, property, or investment, seeking deep value and opportunities rather than following the momentum of market trends. This approach is highly analytical.
What makes a good investment into this economic environment?
In a cyclical market, investments that will benefit from a lower interest rate cycle, which appears to be the prevailing direction, offer upside. Patience is key. Whether the rate cuts occur in three, six or nine months, the consensus trend is downward. It’s better to get in early and ahead of the curve.
So, is it a good time to invest in property? I believe the answer is yes. As interest rate cuts materialise, sectors like real estate, particularly retail property that benefits from increased consumerism, stand to gain significantly. In property, I am often surprised by the poor choices some investors make, particularly when investing in closed-end property funds, especially offshore. These funds generally lack liquidity, have high transaction costs, and suffer from poor governance and transparency. In contrast, listed REITs offer good governance, transparency, minimal transaction costs, and provide diversification and liquidity. In my view, REITs are far superior vehicles; underlying property values and cashflows are sustainable and of high
quality. They offer strong annuity income, a good inflation hedge, and capital values that take care of themselves. It’s important not to be sidetracked by the share price volatility experienced by REITs, which is completely misaligned with the stable nature of their brick-and-mortar assets and the cashflows these assets generate.
What are some of the best books on finance/investing that you’ve read?
What It Takes, Lessons in the Pursuit of Excellence by Stephen Schwarzman, Chairman, CEO and Cofounder of Blackstone
It contains valuable lessons from someone who has delivered exceptional growth and value.
Oh, the places you’ll go! by Dr Seuss
Read this book with a business mindset and you’ll discover phenomenal business, life and career lessons. It’s a fun way of understanding how to manage uncertainty, draw on your intrinsic skill set, back your decisions, and get out of slumps and back onto a winning path.
Competitive Strategy by Michael E Porter
This is seminal reading by an esteemed Harvard Business School lecturer. I was fortunate to work for Monitor Group, a management consultancy which he cofounded, at the start of my career.
Building for Eternity, The Life and Legacy of Reb Moshe Reichmann by Yisroel Besser
This wonderful book merges two of my passions: business and my Jewish identity.
Am I being too subtle? Straight talk from a Business Rebel by Sam Zell
This insightful read comes with some great lessons in property.
OUR 220 MILLION SHOPPER VISITS A YEAR CREATE SUSTAINABLE GROWTH AND SUPERIOR VALUE .
This is Lebo J, aged 19. He shops twice a month, usually at weekends. He arrives at our mall in the mid-afternoon when it’s really buzzing. Many of his friends are there too.
On average, after 2.3 hours of shopping and browsing, Lebo leaves from the east wing and takes a taxi home to his family, a drive of around 40 minutes.
Lebo’s mother will ask him about the discounts and special offers he spotted as he ambled around both floors of the centre. This helps her to plan her weekly grocery shop, which she does before lunch on Mondays.
We know all this and more about Lebo J and our other visitors too. Our multi-faceted consumer behaviour research, combined with our deep understanding of the needs and desires of the communities we serve, leads us every step of the way.
Our unique focus on a superior customer experience ultimately benefits all our key stakeholders: customers, tenants and investors.
As a Vukile stakeholder, you too will benefit from our extensive analysis of shopper behaviour and the factors that drive continuously evolving retail trends. There has never been a better time to invest in people like Lebo J.
BUILDING COMMUNITIES, GROWING VALUE.
Can the JSE stem the tide of delistings, and what does this mean for SA investors?
BY ADRIAAN PASK Chief Investment Officer at PSG Wealth
The number of listings on the Johannesburg Stock Exchange (JSE) has declined by more than half since the 1990s. Today, many of the larger companies on the JSE are duallisted on overseas exchanges, such as those in London and New York, to access cheaper finance. This dual-listing trend reduces the free float or the available universe of investible stocks on the JSE. In the 1990s, the JSE had approximately 850 listed companies. This number dropped to around 400 by 2012 and has now fallen below 300. This decline is attributed to several factors, such as significant costs associated with compliance, reporting, legal and administrative requirements.
Short-term pressures
Being a listed entity also comes with various obligations that exert short-term pressure on board members and businesses to perform
well consistently. Equities are generally a long-term investment, and this short-term pressure can disincentivise businesses.
The reality is that while the JSE’s worldclass regulatory environment ensures investor safety, overregulation can make the market unattractive to businesses due to rigid and significant reporting requirements. Both investors and businesses weigh the benefits against the drawbacks of listing on the JSE and currently, the balance seems to be out of kilter. Moreover, the reality is that market conditions have not been favourable. The JSE has been struggling and it’s not
the most obvious place for businesses to seek funding.
Foreign acquisitions
This environment has resulted in popular South African companies being acquired by foreign investors and subsequently delisted. Examples include Heineken acquiring Distell, and Pepsi acquiring Pioneer. These acquisitions occurred because foreign investors saw value in these companies and acquired them at favourable prices.
The other reality is that the declining number of listings on the JSE means fewer investment opportunities, leading investors to look abroad for alternatives. A common misconception is that these delistings are solely due to South Africa’s tough economic environment. While the local environment plays a role, delistings are a global phenomenon, affecting many exchanges from Frankfurt to New York. A key reason for this trend, as is the case for the JSE, is the heavy compliance burden, which makes stock exchanges less attractive for funding.
It’s not just the JSE
For instance, the London Stock Exchange (LSE) has not only seen several delistings, but its aggregate market capitalisation has also declined. In the US, the number of listings dropped from just over 8 000 in 1996 to around 4 000 today, with valuations now concentrated in the mega-cap space.
How Millennials and Gen Z approach money
BY MARNUS MOSTERT
Principal
Adviser
One generation still holds on to their skinny jeans, while the other only thrifts for vintage clothing. One grew up without the internet, the other doesn’t know what a flip phone is.
investing in retirement savings. Additionally, the rise of the gig economy has pushed many Millennials to seek multiple income streams, fostering an entrepreneurial mindset and a careful approach to debt management.
Gen Z: Digital natives with a focus on instant gratification
But Millennials and Gen Zs differ in more than their cultural tastes and touchpoints – they also approach money differently. Here are some insights into these generational contrasts and the factors driving their financial decisions.
Millennials: Came of age during economic turbulence Millennials, typically born between 1981 and 1996, display cautious spending habits and a strong inclination toward saving and investing. Their financial behaviour is significantly influenced by the Global Recession of 2008. While they were trying to get a foothold on adulthood, the world’s financial systems collapsed around them, taking with it the housing market. This instilled a sense of financial insecurity, as the safety nets Millennials were told to expect in life – job security, trustworthy banks – evaporated. That’s why this generation tends to prioritise financial stability, often using budgeting apps, tracking expenses, and
In contrast, Gen Zs, born between 1997 and 2012, have grown up in a digital-first world, making them more comfortable with using fintech apps for banking, investing, and even cryptocurrencies. They prioritise convenience and instant access to goods and services, often facilitated by buy-now-pay-later services. This generation is more likely to seek financial education online and through social media influencers. Gen Z values financial flexibility and tends to save for immediate goals such as travel, technology, and education rather than long-term investments.
Millennials: Focus on long-term financial security
Millennials often focus on long-term financial security, aiming to buy homes, save for retirement and invest in stable assets. They value experiences but are willing to save for these rather than seeking immediate gratification.
Gen Z: Want financial independence and flexibility –but spends impulsively
This generation often invests in new technologies and cryptocurrencies over traditional financial products. They are more inclined to spend on immediate needs and desires, reflecting their preference for short-term rewards.
In the JSE’s case, we’ve seen the number of delistings rise, but that trend has been quite stable over the past 10 years. However, while the trend hasn’t accelerated, the reality is that there are no new listings coming through.
The JSE is aware of these challenges and is actively communicating with the broader community and investment space about initiatives to attract investors and make it easier for businesses to list.
Taking positive steps
It has launched initiatives to simplify processes, such as plain-language documentation and compliance support, to address these issues. The challenge is to simplify without compromising investor safety. While there is no concrete proof that adequate adjustments have been made to reverse the trend, the JSE’s efforts are a step in the right direction.
Looking ahead over the medium term, it’s PSG Wealth’s view that if interest rates decrease, we might see some appetite for listings. However, improvements to lighten the regulatory burden are necessary. The global delisting trend has also resulted in increased activity in private markets, due to fewer demands. However, it is our view that there is still significant opportunity on the JSE. One doesn’t need thousands of stocks to build a decent portfolio. Simplifying requirements will support the JSE, but the impact will only be known over time.
Gen Z uses apps and online platforms for budgeting, investing and financial education, making financial management more accessible and efficient. They are also adept at finding and using financial resources and advice from a wide array of digital content, including social media, blogs and podcasts.
Additionally, their focus on sustainability and ethical investing is something other generations can learn from. However, Gen Z needs to work on balancing their preference for instant gratification with long-term financial planning. While their embrace of technology and innovation in finance is commendable, it can sometimes lead to impulsive spending and inadequate preparation for future financial needs.
Developing a stronger focus on long-term savings and investments and understanding the importance of financial buffers would help them build more robust financial security.
Six tips for Gen Z for better
money management
1. Balance immediate and long-term goals: Enjoy the present while planning for the future. Allocate a portion of income to long-term savings and investments.
2. Stay informed: Learn about financial products, market trends, and money management strategies. Use online resources and seek advice from certified financial advisors.
3. Build an emergency fund: Create a financial safety net to cover unexpected expenses and avoid high-interest debt –you should aim to have a few months’ expenses saved.
4. Avoid impulsive spending: Be mindful of spending habits, especially with buy-now-pay-later services. Prioritise needs over wants.
5. Invest wisely: Diversify your investments to mitigate risks. This means considering a mix of innovative and traditional investments.
6. Find a trusted financial planner: A certified financial planner can help you achieve your short, medium and long-term needs.
The importance of proper fund categorisation by ASISA
BY ANGELA NGCEMU Business Development Associate, Laurium Capital
Proper fund categorisation is a cornerstone to effective fund allocation strategies, providing a reliable framework for evaluating and selecting appropriate funds. Peer group comparisons enable investors to assess fund performance against similar mandates, offering insight into a manager’s skillset and the portfolio’s potential future returns.
A significant regulatory change occurred in the 2022 budget speech when the SARB offshore limitation was amended, increasing the maximum allowable offshore exposure from 30% to 45% (including Africa). The Association for Savings and Investment South Africa (ASISA) opted against creating new fund categories at the time, anticipating minimal impact from the increased offshore allocations. However, market participant behaviour was the opposite. Asset managers began maximising their offshore allowances
as market dynamics evolved, leading to a broader dispersion in returns for funds within the same category.
Consider the ASISA Equity General category. For a manager investing only in South African equities within the ASISA Equity General category, the success may be misleading if this manager is evaluated against a broad market benchmark that includes a significant number of funds that also invest in non-South African listed equities. Data from Morningstar Direct highlights the disparity in equity distributions among funds, which ranges from 0% to 45% non-South African equities. This variance complicates performance evaluations and raises inherent issues for users relying on ASISA peer group classifications.
One of the key challenges in fund categorisation is the composition bias arising from mismatches between the measured mandate of a fund and the comparative broader peer group. This can lead to unrealistic assessments of the possible outcomes a manager could achieve, highlighting the need for a peer group that contains funds with similar investment strategies and mandates. Given these discrepancies,
APPOINTMENTS
M&G further strengthens its investment team
M&G Investments has appointed Unathi Loos as the new Portfolio Manager. This follows the retirement of Portfolio Manager Simon Kendall after a successful 25-year career in the financial services industry, with 13 of those years spent at M&G Investments. During the overlap period, from 1 July until the end of August 2024, Kendall and Loos will embark on a handover to ensure a seamless transition. Loos joins M&G from NinetyOne and will take over the resource mandates (previously managed by Kendall) alongside co-portfolio managers, Ross Biggs (CIO: Equities) and Aeysha Samsodien (Portfolio Manager). Loos brings over 16 years of financial services experience.
New leader for Ninety One’s Natural Resources team
Paul Gooden has joined Ninety One’s Natural Resources team. Subject to regulatory approval, Paul will become Co-portfolio Manager of the Global Natural Resources strategy, which he will manage alongside George Cheveley and Dawid Heyl.
Based in London, Paul is also taking on the leadership of the Natural Resources team.
Paul’s appointment comes as Tom Nelson will be stepping down from his portfolio management responsibilities to focus on his family business. He will remain with Ninety One in an advisory capacity. George and Dawid have worked on the Global Natural Resources strategy since inception in 2008. With nearly 30 years of industry experience, Paul joins Ninety One from Fidelity International where he was a Co-portfolio Manager of the Global Energy and Global Clean Energy strategies, as well as an analyst covering US energy equities since 2014. Additionally, Paul has held roles with Subsea 7, RBS Global Markets and Morgan Stanley.
New Chief People Officer to drive employee engagement and innovation
RMB has appointed Nomza Makubalo as RMB’s Chief People Officer (CPO), member of the RMB Exco and member of the FirstRand Human Capital Leadership Forum. Makubalo has been an important part of the RMB team since 2018 and has been caretaking the CPO role for the past
updating the peer group categories to accurately reflect the funds’ investment strategies and geographical focus is overdue. ASISA has made changes to two categories (effective date 1 October 2024), which address the lion’s share of fund AUM in the unit trust universe: Equity General will be split into:
• Equity – SA General Portfolios: Funds which invest 100% of market value in South Africa.
• Equity – General Portfolios: Funds that invest in both South African and international shares.
Multi-Asset – High Equity portfolios will be split into:
• Multi Asset – High Equity Portfolios: Invests in a spectrum of investments in the equity, bond, property and cash markets. It is bound by Regulation 28 and the SARB offshore limitations.
• Multi Asset – SA High Equity Portfolios: Invests in a spectrum of investments in the South African equity, bond, property and cash markets. It is bound by Regulation 28.
ASISA has acknowledged the significance of these issues, deciding to overhaul the fund classification standards and introduce more categories. This realignment is intended to fulfil ASISA’s purpose: to provide a framework for grouping portfolios with comparable
nine months. “Nomza has already made her indelible mark on both our human capital function and the RMB Exco. She stepped in to lead strategic initiatives for our people capability, delivering immediate impact,” says Emrie Brown, CEO of RMB. With over 15 years of experience in Human Capital, six of which have been at RMB, Makubalo brings a wealth of expertise to her new role. She joined RMB in 2018 as the HC Divisional Head for the Investment Banking Division, and in 2020, became the HC Divisional Head for the Banking Division, overseeing IBD, Corporate and Sponsor Client Groups, Corporate Transactional Banking, and the Banking Division Enablement areas.
investment objectives and investment universes. As stated by ASISA, accurate classification is vital for investors and their advisers, offering essential information when considering investment choices. South African investors, now allowed up to 45% offshore investments, need assurance that their asset managers will stay in their lane when they select specialist funds.
By selecting from the SA-only category, they can evaluate all the options on offer and be assured that their asset offshore allocation will not be breached by their local allocations. Alternatively, if they favour asset managers with skills in both territories and see value in the synergies of global equity selection, they can use the non-SA restricted Balanced and Equity Funds. By separating local and offshore managers, investors can better evaluate each fund manager’s specific expertise and strategies, leading to more informed investment decisions.
At Laurium, our full investment team sits around the same table, which produces a more integrated and considered portfolio allocation process. Over time, we have demonstrated the skills across asset classes as well as across local, African and offshore territories to offer our clients a truly global or local-only fund. We welcome the amendments from ASISA and look forward to being able to compare apples with apples in both the High Equity and Equity categories going forward.
UNATHI LOOS
SIMON KENDALL
NOMZA MAKUBALO
Figure 1: (ASISA) South African Equity General Category funds as of July 2024
Source: Morningstar Direct
Your poor virtual setup is ruining your brand
BY FRANCOIS DU TOIT CFP® PROpulsion
It is old news that virtual meetings are now a big part of our work world, and many financial professionals meet clients and do presentations online. I have the privilege to interview different guests from all over the world every week, and I’m amazed to see how many of them don’t invest in good professional setups, even though they regularly speak to large audiences virtually. I’m also astounded that corporates and large firms don’t invest in setups for the people that represent their brand.
The current landscape
I recently did a poll on LinkedIn. It showed that 64% of people use only their laptop’s built-in hardware for virtual meetings and events. Only 10% use HD cameras, pro sound, and lights. About 22% use a webcam and the laptop’s built-in microphone. Another 4% use other setups. It is clear that most people don’t invest in good virtual setups. This might be because they do not know why it is important or that the mere thought of more technology is putting them off.
The importance of a professional virtual setup
Perception and brand: A good virtual setup makes you look and sound better. This helps people see you as a professional. It also makes your company look good. If you have a clear picture and sound, clients will have more confidence and trust in you. Client experience: When you have good tools, your clients will have a better experience. They can see and hear you clearly. This makes it easier for them to understand you, and makes the meeting more enjoyable. When clients have a great experience, they tell others. Engagement: Good audio and video keep clients interested, preventing them from getting distracted or bored. This helps you keep their attention. It also makes it easier for them to follow what you are saying.
Key components of a good virtual setup
Camera: A good camera makes a big difference. HD or 4K cameras are much better than built-in laptop
“Good audio and video keep clients interested, preventing them from getting distracted or bored”
cameras and they show a clear picture. Some good webcam models are Logitech C920, C922, or C925 and the Logitech Brio. Good mirrorless cameras are Sony ZV-E10 and the Canon M50 Mk II.
Microphone: A good microphone makes your voice clear and removes background noise. Clients will forgive video that is fuzzy, but they will become frustrated by unclear audio. Some good microphones are the Blue Yeti and the Audio-Technica ATR2100x. I personally love and prefer Rode microphones.
Lighting: Good lighting helps people see you clearly. You can use a ring light or softbox lights. These lights are easy to set up and use. Many advise that natural light is a good alternative; however, I am not a big fan. Natural light is usually harsh and way too bright. The other issue is that natural light shifts constantly as the sun moves. Rather,
invest in continuous video lights that you can control. Background: A clean background makes you look professional. It should not be too busy. You can also use a plain wall or a virtual background. Virtual backgrounds should be used wisely, though. A green screen that is well lit works best for virtual backgrounds. Few things are as frustrating as watching someone disappear into their virtual background.
Software: Good software helps you run smooth meetings, and tools like Zoom and Microsoft Teams are popular. They have features that make meetings easy and fun. You can also consider using more advanced software like OBS or Ecamm Live for Mac users to create a more professional experience than the normal Zoom or Teams experience.
Opportunities and benefits: Having a professional online setup can open new doors and help you build your brand. You could get more opportunities to speak and to participate in webinars or panel discussions. Your clients will love meeting with you more, and they will spread the word, which your business will benefit from. Spending money on good tools now will pay off later. It’s an investment, not a cost: It is time to invest in your virtual setup. Start with a good camera, microphone, and lighting. Use good software to run your meetings. You will see a big difference in how people see you and your business, and you will stand out from the rest for all the right reasons.
A good virtual setup can make a big difference in your online meetings. By investing in a quality setup, you can improve your image, client experience, and engagement. Good software can also help you run your meetings and events more smoothly and effectively. It is, however, important to remember that there is more to virtual setups than the equipment.
Stay curious.
How South African parents are preparing for international opportunities
BY REX COWLEY Director and Co-founder of Overseas Trust & Pension
Many South African parents are looking beyond domestic borders to ensure brighter futures for their children. Several are turning to international education, travel and second homes to preserve and expand their wealth while enhancing opportunities. International education and travel offer opportunities to gain a global perspective, develop intercultural skills and build diverse networks. Exposure to different cultures and educational systems enhances adaptability, critical thinking and communication skills. Moreover, such experiences open doors to prestigious universities and global career opportunities.
This trend reflects the aspirations of South African families who aim for expanded educational horizons and enhanced financial security for their children. Key motivations driving South African parents to explore international opportunities include pursuing high-quality education. Many perceive international universities as offering superior academic experiences, invaluable global networks, and diverse cultural immersion. The current digital age has paved the way for access to international education.
Online courses supplemented by shortterm residencies offer cost-effective alternatives to full-time overseas study. However, the desire for immersive international experiences highlights the need for thorough financial planning.
Financial considerations and strategic planning
Parents must navigate numerous financial considerations when planning for their children’s education abroad. International education can be prohibitively expensive. One notable example we have explored involved regular savings of R150 000 invested per annum from 2009 to 2024. The analysis examined how this amount, if invested simultaneously in the JSE and the S&P 500, would perform over time.
For instance, if someone started saving R150 000 in 2009, their investment could grow to R11 941 074.83 by 2024 if invested in the S&P 500. This growth could enable significant financial goals, such as educating a child overseas or purchasing property for student accommodation. Studying in the UK, for example, can exceed £35 000 (R770 000) annually, covering tuition, accommodation and living expenses. Hence, early and strategic financial planning is imperative to manage these costs effectively and ensure a seamless transition for their children.
A robust strategy involves saving anticipated expenses in the currency to mitigate currency fluctuation risks. Financial advisers are instrumental in recommending suitable investment options.
Given the relatively short investment horizon – from high school to university – a balanced approach should be prioritised, incorporating inflation-linked investments and growth assets. This strategy ensures robust growth while minimising the risk of significant value fluctuations, providing parents with financial security.
Long-term family planning beyond education
Planning extends beyond education to longterm benefits, such as acquiring a second home in the destination country. This serves dual purposes, providing accommodation during the study period and potentially serving as a retirement or vacation home for parents. Cities like Manchester, London and Edinburgh are popular.
Furthermore, many parents contemplate relocating closer to their grandchildren as their children settle abroad. Depending on feasibility and personal circumstances, this may involve purchasing a second home or permanent immigration.
Schroders Capital launches AI analyst for private equity
As focus shifts toward nearer-term macro and geopolitical headwinds, energy transition efforts lose pace. But climate change will not solve itself, and Schroders believe there continues to be energy transition opportunities for investors.
Schroders Capital, the specialist private markets business with $94bn of assets under management, has launched a Generative AI Investment Analyst (GAiiA) platform. This innovation is designed to speed up the analysis of large volumes of data, enabling its private equity (PE) investment specialists to focus on delivering value through strategic investment activity. It follows comprehensive in-house testing and further builds on the technology evolution across the Schroders Group, which has been actively deploying generative AI across the business for a substantial period.
Schroders Capital’s proprietary and internal-only platform harnesses the technical expertise of its data science specialists alongside the deep investment knowledge of its PE team. It forms a core component of its leading private markets investment intellectual property. PE specialists can now automatically screen extensive volumes of data, accelerate due diligence
processes, and generate a significant portion of draft investment summaries in significantly less time. By supporting with the creation of draft investment memos, the platform has the potential to become a key part of the investment process.
By handling the heavy lifting of data analysis, GAiiA, which always has continual and extensive human oversight and control, can enable Schroders Capital’s investment professionals to analyse even more investments, allowing them to reallocate more of their time on adding value through direct interactions and strategic decisions with target and existing investments.
GAiiA is currently being used by Schroders Capital’s PE team for private equity direct/co-investments. It is continually being optimised, with plans to expand its use to private equity primaries and secondaries in the future, and to other private market asset classes within Schroders Capital where appropriate.
According to Nils Rode, Chief Investment Officer at Schroders Capital, “This proprietary platform will elevate our investment analysis to a new level, enabling our team to make faster and even more informed investment decisions, and to focus on higher-value activities.”
The role of financial advisers
Financial planners and wealth management experts guide parents through the intricate landscape of preparing for their children’s international pursuits. Several key areas need to be considered. They should first help clients understand the financial implications of international education, covering tuition, living expenses and potential travel costs. Early and strategic savings are crucial, as are using suitable currencies to mitigate currency risk mismatches.
Advising on an investment strategy is pivotal; recommending a balanced approach ensures steady growth while protecting against significant value fluctuations over the savings period. Furthermore, long-term planning discussions should extend beyond education to encompass broader implications, such as acquiring property abroad and preparing for eventual family reunification.
An effective investment strategy is essential for achieving a successful future, enabling families to navigate the complexities of international education planning. Financial advisers play a pivotal role in guiding families through this intricate landscape, ensuring they make informed decisions that benefit their children for years to come. With careful planning and strategic financial management, South African families can envision a brighter, more globally connected future for their children.
Using foreign products to provide for education or post-educational needs can enhance the likelihood of achieving the desired outcome. For example, international preservation funds provide asset protection, a degree of tax efficiency, and access to funds when needed.
Across the business, Schroders has made its internalonly AI assistant, Genie, available to all employees globally. Leveraging the latest GPT models, Genie is now used by over 1 000 colleagues across the firm each day. More broadly, Schroders has already identified and is working on a substantial number of potential AI use-cases across the business, such as translations, as well as helping our specialists better understand clients’ behaviours and investment patterns.
“This proprietary platform will elevate our investment analysis to a new level”
Graham Taylor, Head of Private Assets Data Insights at Schroders Capital, says, “Schroders envisions a future where AI tools become an integral part of the investment process. The implementation of GAiiA is a significant step towards this vision. We are committed to driving innovation and embracing technology to deliver exceptional value to our clients across asset classes.”
Glittering gold: What is behind the recent rally in the gold price?
BY MICHAEL KRUGER Senior Investment Analyst at Morningstar SA
Our investment team at Morningstar has written previously about the history of gold as an investment and the potential role it may play in providing protection against an equity market decline, as a possible inflation hedge, and whether including gold in a portfolio can improve long-term returns or risk-adjusted performance. Given recent movements which have seen higher prices in the precious metal, these considerations are again front of mind for investors, who are trying to decide whether an allocation to gold may be appropriate for their portfolios.
To set the scene, it is worth highlighting the significant upward moves that we have seen from gold over the past few months. Gold reached an all-time high of $2 450 per ounce in May 2024, and has delivered a year-to-date return of 13.0% and a return of 19.5% over the past 12 months (to the end of May 2024). In this article, we explore what has been driving the strong upward moves that we have seen in the gold price.
What’s interesting about the recent surge in the gold price from late 2022 to early- to mid-2024 is that it came during a period when market participants would not have expected the yellow metal to rally significantly. Gold prices tend to be negatively correlated to real interest rates. The lack of cashflow generated from gold increases the opportunity cost to hold it as interest rates rise, and the opportunity cost to fall as interest rates fall.
What you can see from the red bars in the first chart above is that real interest rates have risen significantly since the US Federal Reserve started hiking interest rates aggressively, starting in March 2022, to tame rampant inflation. This has coincided with strong upward movements in the gold price, which is a bit of an anomaly when looking at the inverse relationship between real interest rates and the gold price that has persisted historically.
Another interesting observation is that the recent rally in the gold price has coincided with a period of outflows from gold ETFs, which is evident from the red bars in the second char t. The previous strong run up in the gold price in 2019 and 2020 was supported by strong inflows
into gold ETFs; however, the recent rally does not appear to be supported by gold ETF purchases.
The recent surge in central bank purchases of gold since 2009 and a rising gold price has grown the precious metal’s share of global international reserves to the detriment of fiat currencies. While the US dollar still dominates the share of global international reserves, gold has now surpassed the euro as the second most dominant portion of global international reserves.
So, what is behind the recent rally in the gold price? Firstly, it is worth highlighting that there has been an obvious increase in geopolitical risks due to the ongoing wars, starting with the Russian invasion of Ukraine and then the outbreak of hostilities in the Middle East. This has driven the demand for gold, which is often viewed as a safe haven asset. Other factors that have impacted the demand for gold are macroeconomic uncertainties created by high global inflation, concerns over the global recovery from the pandemic lockdowns, and more recently, worries over the outcomes of the numerous national elections taking place in 2024.
As the graph above highlights, unusually high central bank buying of gold has also contributed to the precious metal’s record highs. In 2022 and 2023, there were over 1 000 tonnes of gold purchased, compared to the historical average of around 400 tonnes.
If we drill down a bit further, the most notable central bank purchases over the past four years appear to be coming from the People’s Bank of China (PBOC), the Reserve Bank of India and the Central Bank of Turkey. Their reported primary reasons for purchases have been gold’s value in times of crisis, its benefits of diversification, and being a long-term store-of-value and inflation hedge.
If we reduce the analysis to simply focusing on the US dollar and gold’s share of global international reserves, it appears to indicate that the US dollar’s share of global international reserves is trending lower, while gold’s share is increasing. The reduction in the share of global international reserves held in fiat currencies may be caused by declining trust in ‘credit assets’ due to worrying asset bubbles, escalating sovereign debt, the breakout of major wars and inflation fears. This appears to be driving the continued demand for gold rather than fiat currencies, and it will be interesting to see whether this trend continues going forward.
Interestingly, the recent rally in the gold price has not been supported by positive movements in real (after inflation) interest rates or flows into ETFs. Instead, the strong upward moves appear to be driven by central bank purchases of gold in China, India and Turkey, as well as some other Asian and Eastern European countries. The recent rally in the gold price, as well as the increase in central bank purchases, has increased gold’s share of global international reserves, with gold surpassing the euro as the second largest component of global reserves. While the US dollar still maintains a healthy lead in terms of its share of global international reserves, the trend appears to indicate that gold may be gaining ground at the expense of the greenback.
So what? A brief note on Morningstar’s view on gold as an investment
Although not the specific focus of this article, it is worth touching briefly on Morningstar’s view on gold as an investment. The introduction of gold in a portfolio is not guaranteed to improve risk, returns or riskadjusted returns for every period based on historical evidence. Rather, the track record of the precious metal is mixed, and gold can go through long periods of underperformance. The strongest evidence for holding gold appears to be as a safe haven in periods of significant market volatility. Our current view is that it should be viewed as an insurance policy rather than a core holding, and should not make up a significant portion of a client’s portfolio due to its inability to deliver significant long-term real returns.
WOMEN IN FINANCE
54% of our overall business is made up of women
JEANNINE NAUDÉ-VILJOEN GENERAL COUNSEL FOR TRANSUNION AFRICA
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
At the start of my career, I took on the challenge of a business role – which is not typical of a legal professional – that led to me being appointed an executive for several non-legal functions at Absa. During my time at Absa, I also qualified top of their management programme. At the JD Group, I was the youngest, and first, woman to be appointed to their financial services EXCO team. In my role at TransUnion, my contributions have led to me being promoted to global vice president.
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years?
I believe that significant progress has been made in driving gender diversity in South Africa. Most of my peers are women, and in my own business function, some 70% of my employees are women. Today I am privileged to be a part of an organisation that has diversity, equity and inclusion as a central element within our business strategy, and 54% of our overall TransUnion Africa business is made up of women. I really think that diversity, equity and inclusion is good for business, but we can still do more – it will, however, require a collective effort to extend our current successes.
“I believe that significant progress has been made in driving gender diversity in South Africa”
It’s refreshing to see more female portfolio managers
FARZANA BAYAT PORTFOLIO MANAGER, FOORD ASSET
MANAGEMENT
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
Asset management is a tough industry to break into and I initially found myself in a large investment house where I was boxed into a specific role, from where it would take years to progress. I then decided to join a small investment house where I was fortunate to be given the scope to “get my hands dirty” and be involved in a wide range of activities. Being part of a small team provided me with invaluable exposure and learning opportunities. The knowledge and experience I gained during that time have been instrumental in my career. I was also given the opportunity to manage money early on. My passion and commitment to do the best for clients have led to success on my investment journey.
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years?
The asset management industry is still predominantly male dominated. While the demographics have improved significantly over the past 20 years, we still have a long way to go. However, it has been refreshing to see a lot more female portfolio managers coming to the fore in recent years, and more women in senior and investment roles – compared to the past where they were largely in business development, marketing and operations. It’s not just about having more women in the industry; it’s about the roles they play and how much decision-making power and autonomy they are given to contribute meaningfully to an organisation.
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions?
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions? Finding meaning and joy in what you do is certainly the most important thing that you can do in your life, and here I think that work-life balance has become much more fluid. It also looks different for each one of us. You have one life, and only you get to decide how you want to invest your time.
Being clear about what is important to you, and what you are prepared to trade off against that, empowers you to be more courageous about these choices.
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
I have worked with so many wonderful mentors and role models during my career, but also realised early on that you need to seek them out – they are not going to come and find you. Coaching and mentorship can take many forms, but you need to own the journey. No one can want anything for you more than you want it for yourself. As women, we often struggle to ask for what we want or need, so finding someone who has qualities that you admire, and who can show rather than tell, is very important. Equally so, we need to bring the next generation of women along on this journey. This is not only a privilege but a responsibility.
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles? What initiatives or policies have you found to be most effective?
I think we have made great progress in driving gender inclusion but there is always more to be done. Unequal privilege is not only something that has held many women back in the past, but also something that many of us currently have and that we need to use to continue to pave the way for others to grow and excel in their respective roles. We need to be deliberate about our hiring strategies and we need to keep ourselves accountable. Investing in talent development and coaching for women is critically important. We also need to create platforms for women to be seen.
Working-mum-guilt syndrome is real, where you end up feeling guilty for not giving enough of yourself to both work and your family, feeling stretched in all directions, which can be very overwhelming at times. But I’ve come to realise that it’s important to strike a balance and set up a strong support system at home so that you can give your best to both parts of your life. When I’m at work, I’m fully present, knowing that I have enough support with the kids. And when I’m at home, I’m fully present and make the family time count. The trick is to focus more on the quality of time rather than the quantity of time, and try to do meaningful things together.
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
I can’t single out one mentor. I’ve benefited from multiple mentors and role models at various stages of my journey. As you strive to excel at what you do, you’ll find inspiration and learn valuable lessons from different people. At each stage in my career, I’ve sought to harness different skills – whether in investment style, presentation skills, people management, handling stress or maintaining balance. Each stage has brought new challenges and lessons from diverse sources. Mentorship probably has a bigger role to play in empowering women in this industry – when you first enter the industry, it can be overwhelming, and strong role models can equip you with the tools to navigate this journey.
“Mentorship probably has a bigger role to play in empowering women in this industry”
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles?
We need to encourage more women to enter the industry, as female representation is still very low. We need to start educating at school level and raise awareness about career prospects in finance. Grad programmes and mentorship opportunities seem to be working well to do this. Businesses need to make active, conscious decisions to close the gender gap and incorporate this in their recruitment policy with set targets and outcomes.
Celebrating the progress of women in finance
BY CARMEN NEL HEAD OF MULTI-ASSET, TEREBINTH CAPITAL
When Women’s Month rolls around, we usually bemoan the lack of progress in gender equality in the economy, finance and leadership positions in general. Yet we underappreciate the progress that has already been made and underestimate the significant impact even incremental changes have on team dynamics
Women play crucial roles in the economy – both as consumers and as caregivers – with this having a notable influence on public policies, such as social welfare, and on education – think about the corporate initiative of ‘Take a Girl Child To Work Day’. A greater role in the economy, in part due to rising female participation in the labour force and greater financial independence, means women are increasingly taking responsibility for their own financial futures as investors.
We acknowledge that women’s wealth creation still lags that of men, as recently highlighted by the World Economic Forum1. This is in large part due to a growing wealth gap as women age, which in turn is a function of lower labour market participation – usually temporary – associated with having to split their attention between work and motherhood. For more on this, read up on Claudia Goldin’s work on women in the labour market, which won her the Nobel prize for economics in 2023. Platforms such as this publication have over the years educated us on the growing impact of women in the asset management industry, with rising demand for female-led investment teams and lead managers. Yes, there is still a long way to go to achieve perfect equality, but that does not mean we should not celebrate our shared successes.
A 2021 study of women leaders in financial services by Deloitte2 highlights that only 19% of C-suite roles worldwide are held by women. At 18.6%, this puts South Africa on par. When we delve deeper, we see that women account for 31.6% of senior leadership positions in SA financial services, above the US (21%), UK (21.8%), China (17.4%) and Brazil (13.7%). Importantly, the female share of managers in financial services that will be the
1 World Economic Forum, Financial and Monetary Systems, Women are poised to reshape financial markets —as investors and financial
2 Deloitte Insights, Advancing more women leaders in financial services: A global report, 2022
next generation of leaders in South Africa is 42.1%, eclipsed only by Singapore. This highlights the progress we have made and the work that needs to continue to expand the inclusion of women in our industry.
In line with Terebinth Capital’s founding principles 11 years ago, research increasingly shows the benefits of recognising and harnessing the unique perspectives and qualities that women bring to the table. Their adeptness in communication, emotional intelligence, and strategic thinking, coupled with a penchant for collaboration and relationship-building, have become pivotal assets driving innovation and success in the financial landscape.
“Women in finance can inspire future generations, shattering glass ceilings and redefining the norms of the industry“
Yet the journey of women in finance is not merely one of inclusion, it is also one of empowerment. Skills transfer, a fundamental aspect of their presence, manifests itself in the exchange of knowledge, expertise and experience that enriches the collective tapestry of financial institutions.
The ripple effects of women’s involvement in finance are far-reaching, extending into the realms of mentorship, leadership and innovation. Women in finance can inspire future generations, shattering glass ceilings and redefining the norms of the industry. Their presence not only amplifies the voice of diversity but also sets a precedent for a more equitable and progressive financial landscape.
decision-makers, 7 June 2024
Women must actively promote, support and champion other women
BY ROBERTA BARR HEAD OF VALUE ESG AT SCHRODERS
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
I joined Schroders in 2016 as a quantitative analyst, but soon found my passion in value investing and sustainability. After years of championing sustainability within the firm, I was made Head of Value ESG in 2020, and launched the value team’s Global Sustainable Value fund in 2021.
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years?
Progress is never linear, but I certainly think the trend has been positive. I’m very lucky to work at a company that really prioritises and stands up for gender diversity and inclusion. While you’ll always find pockets in any industry or company where there isn’t sufficient diversity, or it feels like you’re fighting a losing battle, I think poor attitudes towards inclusion are becoming increasingly unacceptable. And we’re beginning to see the fantastic output of years of conscious efforts to improve gender diversity and inclusion. For example, we now have some exceptionally high-quality female role models, such as Johanna Kyrklund at Schroders, Sonja Laud at LGIM, and Dame Anne Richards at Fidelity.
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions?
Remember this is a marathon, not a sprint! Yes, there will be times where you’re incredibly busy with work and that must take priority, but such times should be the exception, not the rule.
Surround yourself with people who share your vision
BY JUANITA VAN DER MERWE ASSOCIATE DIRECTOR: TAX COMPLIANCE, AJM
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
It was by chance and personal circumstances that I was afforded an opportunity to enter the finance industry. At the time, I had no experience in the field and no clear vision of what I could achieve or where the road would lead me. I showed interest in various subdivisions and continued to grow and expand my knowledge through on-thejob training. Through commitment and dedication, I was afforded the opportunity to further my studies and career.
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years?
I find my balance through a happy combination of cross-country running, a part-time PhD in a subject that I’m fascinated in (the circular economy) and always keeping Friday nights free to spend quality time with my partner.
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
I’ve had mentors – and currently have an amazing long-distance mentor, Martha Metcalf, who works in New York – and have really appreciated their guidance both through challenging situations but also for day-to-day advice. I think having someone that you deeply respect as your sounding board, trusted advisor, and occasional reality-checker is incredibly important, whether that’s through formal mentorship like I have with Martha, or just someone you occasionally meet for coffee and a chat.
“I’m very lucky to work at a company that really prioritises and stands up for gender diversity and inclusion”
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles? What initiatives or policies have you found to be most effective?
One critical step, which I don’t believe is talked about enough, is the importance of women actively promoting, supporting and championing other women – whether it’s their juniors, their peers who they might feel they are ‘competing’ with, or even their seniors. I believe it’s our responsibility as women to influence change in female representation as much, if not more so, than men, and I will always try to be the biggest advocator for other women. I’ve had other women do this for me, and I will always be grateful for this. I certainly make sure that I do the same for others whenever I get the opportunity.
When I entered the finance industry 23 years ago, most senior positions were predominantly filled by males. There was a considerable amount of interest shown by women and the transition was slow, yet possible. We’ve had to work hard to earn the trust and respect of our peers, but with dedication and hard work, it was inevitable. There is a good balance in the industry, and women are encouraged to pursue these positions.
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions?
Everything is possible. You are stronger than you think, and there will always be a way. Stay focused and convince yourself that everything is possible. When you have a good support system and surround yourself with people who share your vision, it makes everything easier. Life is too short not to give it your all. There are days when you doubt yourself, but I can assure you that hard work pays off.
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
At the beginning of my career, I had to find my own way. There were a few individuals that I looked up to in the industry, and I had the pleasure of working with them at my previous employer. It so happens that these individuals are now the current owners of the firm I work for. They have supported me and shared their knowledge, for which I am truly grateful. Mentors help to refine you and give you the confidence to believe in yourself.
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles? What initiatives or policies have you found to be most effective?
Creating awareness is key. Providing equal opportunities within the workplace is essential and encourages women to achieve their goals. Giving female employees a voice and allowing them to grow with the firm will not only benefit them but also their employers.
“They have supported me and shared their knowledge, for which I am truly grateful”
Embrace the offers for help and don’t feel guilty!
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
My career started when my kids were young, and I was also studying part time. In those days there was no flexitime, let alone work from home. Women had to work much harder than their male counterparts, and most had wives at home to look after the kids. I was determined to get where I am today, so I took up the challenge and never looked back. I had to make a few sacrifices here and there, and in my spare time I had to choose between catching up with work, studying or resting to recharge.
“I see a lot of female portfolio managers, an area which was previously dominated by males”
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years? I think the industry has done well in transforming. For example, I see a lot of female portfolio managers, an area that was previously dominated by males. I feel strongly that this must continue and not be reversed. There should be a deep pool of young female professionals to draw from.
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions?
My career picked up when my children were small. I was fortunate that I had a good support system in my husband and my helper. It was hard to not feel guilty when the kids expected me to drink tea with other moms at 10am at school after dropping them off. I had to explain to them that unfortunately I had to work to afford their school fees. I tried to attend as many events as I could on weekends. And don’t forget the trips to the print shops in the evenings when school projects were done last-minute – we are going back some 25 years here! I also had to juggle all this with my Makoti responsibilities (that is, being a daughter-in-law). I tried to attend all the important events and am glad I did, because even where I am today, I am respected by my in-laws. My advice to young women would be to embrace the offers for help and don’t feel guilty about it. Surround yourself with people who are not threatened by you climbing the ladder and who share your vision.
Unconscious biases in hiring and promotion still exists
BY FAZILA MANJOO PORTFOLIO MANAGER, MERGENCE INVESTMENT MANAGERS
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
I started my career as an actuarial specialist and after a few years I realised that I did not like the static nature of the work. It’s not easy to change specialisation, however, and find a space that you enjoy working in and people you like working with. It requires bravery, humility, hard work, and risk-taking. I moved to investment management, as the ever-changing market environment was one where I could apply my many research skills. Having specialist skills, being able to apply them to different types of problems, and the desire to keep learning have served me well in my career.
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years? Over the last 20 years, representation of women in the investment industry has
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
In my previous job, I looked up to my manager who was a hard worker but also played hard. This taught me that though we work hard, we need to enjoy the fruits of our hard work. Later, in my current job, I had a mentor. It was way before I even thought that I would be in this position. She was already a director and even today, after her early retirement, we are friends. She encouraged me and acknowledged my strengths. We would have long chats about work environment, and she gave me good advice on how to handle things and ‘read the room’. I think it is very important for everyone to have a mentor, even if it is just to listen to them.
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles? What initiatives or policies have you found to be most effective?
I think a lot has been done already. It is up to us as women to be ready when the position is available and raise our hands. I do not think we should be employed just because we are women; but having said that, we shouldn’t be overlooked because we are women either.
improved in some areas, but in others it is in stasis. There have been improvements at entry-level positions and in less specialised roles. I work with a few more female analysts than I did at the start of my career, but this hasn’t meaningfully filtered up to more senior positions. I think the reason for under-representation of women is due to unconscious biases in hiring and promotion. Most leaders in the industry are men and they tend to favour people that look like them and act like them. So, there is a persistent glass ceiling.
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions? This is a difficult question, as I think the idea of ‘work-life balance’ is a myth.
Being an investment portfolio manager is a high-stress career. Stress is a normal part of most of our lives, and learning to navigate stress daily has been crucial to how I manage ‘work-life balance’. Advice I would give is to know yourself, know your limits, and actively look after both your physical and mental health. Know when to take a break and recharge. Also, remember to nurture a variety of interests in your personal life.
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
I did not have mentors, but I think having one can be valuable. What I have is role models. Role models matter, particularly
“Stress is a normal part of most of our lives, and learning to navigate stress daily has been crucial”
for women, and you can look outside your field of work for inspiration too. I admire Toni Morrison. She was the first black woman to win the Nobel Prize for Literature. She was a visionary force and wrote about the struggles of personal liberation and self-ownership. And she didn’t just write about it, she lived it. Her work is empowering to women, especially women of colour. I take inspiration from a lot of different places.
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles? What initiatives or policies have you found to be most effective? Leaders in the industry should empower women in more specialised roles. We need more networks that bring women together regularly to support other women. A more hands-on approach is necessary at companies to attract, develop and retain female talent in a work environment where everyone is valued and respected. Good intentions are not enough; leaders need to be strategic about change and diversity should be measurable. In my experience, the most successful companies have valued a diversity of ideas in the team and nurtured creativity in the workplace. This naturally resulted in the hiring and promotion of more women, and improved the performance of the team.
Have
a
strong work
ethic, integrity, and be a team player
BY PRAN NAIDU SENIOR ANALYST: STONEHAGE FLEMINGGLOBAL BEST IDEAS
Can you share some key milestones and challenges in your career journey that led you to a senior position in the finance industry?
I have been fortunate to have worked at companies with open-door policies, which has played an important part in shaping my career. Adopting a strong work ethic, being a team player who contributed positively to the corporate culture, and being true to myself went a long way; it was noticed and valued. The finance industry has its fair share of challenges; equity markets are volatile, and emotions often come into play when managing clients’ wealth. Acting with the highest levels of integrity, being rational, and always doing what is best for your client by putting your client first helps you navigate the challenges.
How do you perceive the current state of gender diversity and inclusion in the finance industry, and what changes have you observed over the years?
Data shows that the industry is still behind with respect to gender diversity and inclusion. But the direction of travel is positive and that is encouraging.
work-life integration. This provides us with the flexibility to adapt to changing demands and to prioritise as and when the situation changes. When taking a work-life integration approach, the most important consideration is to ensure one is always present.
Have you had mentors or role models who have significantly influenced your career? How important do you think mentorship is for women in finance?
African Bank helps empower Usha Maharaj
The Africanbank Women Enterprise Development Programme is a 12-month initiative aimed at empowering women of colour within the entrepreneur's space in South Africa. The programme offers comprehensive support to female-owned businesses, guiding them through the various stages of establishment, launch, commercialisation and eventual expansion. It’s a part of the African Bank strategic Excelerate25 transformation initiative. By addressing the unique challenges faced by female entrepreneurs of colour, the programme narrows the gender gap in business ownership and fosters a more inclusive economic environment. Through tailored Enterprise and Supplier Development capacity-building programmes, such as the WEDP, participants are equipped with the necessary skills and knowledge to enhance their market competitiveness and attract potential investors. Ultimately, by strengthening the capabilities of small and mediumsized enterprises (SMMEs), this initiative seeks to facilitate greater access to markets and capital, promoting sustainable growth and development.
Usha Maharaj's foray into the business world started in 2014. She soon made the decision to chart her own path, culminating in the launch of her training business UshaMaharaj.com, an enterprise dedicated to empowering women in the finance sector. Her approach to business impacts the lives of countless women within the finance sector, with programmes designed to enhance both technical prowess and soft skills, build up their self-esteem and assist them to overcome workplace obstacles.
A pivotal moment in Usha Maharaj's career came during the Covid-19 pandemic. Recognising opportunity amidst adversity, she decided to offer online training services for customers for free, a strategic move that not only expanded her reach but also propelled her into uncharted territories like Kenya and the United States.
“The direction of travel with regards to gender and diversity is positive and encouraging”
The entire industry is responsible for promoting diversity and inclusion, with several initiatives having been implemented to accelerate the transition. As more seats at the table open up, the narrative shifts from competing with one another to becoming each other’s biggest promoters. This is a powerful dynamic that will continue to enhance and shape the future of the industry.
Balancing work and personal life can be particularly challenging in demanding roles. How have you managed this balance, and what advice would you give to other women aspiring to senior positions?
I wouldn’t say there is a cookie-cutter approach to managing this; it really comes down to the individual’s circumstances and their preference on how to handle it. For us as a family, we have embraced
I’ve been fortunate to have had inspiring, approachable and effective mentors and sponsors throughout my career. Mentorship can be very beneficial if both parties are aware of each other’s expectations and commit to goals. Mentorship is what you make of it; don’t be afraid to initiate the relationship, always come prepared, and be comfortable with sharing your vulnerabilities in a safe space, as it can be rewarding and help you fulfil your personal and professional development. Identify at what stage in your career a sponsor may be of more value; the roles don’t have to be separated but often are.
What do you believe are the most critical steps the finance industry needs to take to support the advancement of women into senior roles? What initiatives or policies have you found to be most effective?
My experience to date suggests that having dedicated leadership programmes or opportunities made available to all employees, regardless of their background, is one way to overcome the perception around why underrepresented individuals are promoted to senior roles. It’s not merely a tick-box exercise but based on merit, which brings a layer of objectivity into the decision-making process. Transparency is crucial to this process, both in defining selection criteria and in providing feedback on reasons for and against individual promotions.
“The programme endeavours to narrow the gender gap in business ownership and foster a more inclusive economic environment”
Maharaj's entrepreneurial story is a testament to a spirit of resilience and vision – what began as a daring leap into the unknown has blossomed into a thriving enterprise dedicated to empowering women in the finance sector.
“In retrospect, it was taking this initiative that catapulted me forward and really started me on a path of sudden growth. At the time I just knew I had to be innovative if I wanted to survive. This move really solidified my presence in the industry,” Maharaj says.
She embodies empowerment by recognising and valuing the significance of supporting and empowering women as they strive to advance their businesses individually. Through her pioneering programmes, she positively influences the lives of numerous women in the finance sector. These endeavours, aimed at improving both technical expertise and interpersonal abilities, showcase her dedication to nurturing confidence and surmounting workplace challenges. She says, “In every interaction, I try to remember my own difficult journey and to bring a level of empathy to the work.”
In 2022, Usha Maharaj was named as a finalist for the South African Institute of Chartered Accountants Chairman's Making a Difference Award. This accolade acknowledges her as a prominent figure who consistently shares valuable insights and perspectives.
"The Women Enterprise Development Programme provided me with the tools and knowledge to navigate the business world with confidence. From strategic planning to financial management, I was equipped with practical skills I could apply to my business.
“Additionally, the encouragement and support from other participants and mentors inspired me to dream bigger and strive for greater success.”
Edna Sathekga-Montse, Group Chief Transformation and Sustainability Officer at African Bank, says, “The WEDP is vital for the success and sustainability of women entrepreneurs in the SMME sector. Through our comprehensive approach, we create an enabling environment where women can thrive. By investing in women-owned businesses, we also foster social change, paving the way for a more equitable and prosperous society."
As part of the programme, participants in the cohort are provided with opportunities to showcase their products or services, engage in networking platforms and explore potential investor opportunities. This includes participation in events aligned with the Bank’s transformation goals.
Group gap cover – a strategic employee benefit
BY JAMES WHITE Director of Sales and Marketing at Turnberry Management Risk Solutions
In the past, employers would subsidise medical scheme contributions, but as medical inflation has risen along with the cost of medical procedures, this has become an exercise that is simply too expensive for most. Gap cover, however, remains a cost-effective option that employers can offer their staff, and the benefits of group gap cover are numerous, particularly in an economy where many people are forced to downgrade their medical aid due to affordability factors.
The affordability challenge
Medical aid premiums are increasing at a faster rate than the consumer price index (CPI). This not only means that there are few employers that can afford to subsidise them, but also that people are looking for more cost-effective options than the top plans to suit their budget. Many people are opting to move from comprehensive medical aid options to lower options and even hospital plans. However, with reduced premiums comes reduced cover, as well as smaller networks of designated service providers (DSPs) that will provide full cover options.
“Companies can access group gap cover, which gives employees access to discounted monthly premiums”
On lower medical aid plan options, there are typically higher and more frequent co-payments, including penalties for the use of non-DSPs, increased sub-limits for a wider range of procedures, and greater medical expense shortfalls. These entrylevel plan options will generally cover between 100% and 200% of the medical scheme rate, but frequently, specialists will charge many times more than that, often up to 600%. This shortfall is then up to the patient to cover, and it can end up costing tens of thousands of rands. In trying to save money by downgrading medical plans, people can end up in far worse financial straits.
The advantages of group gap cover Gap cover is becoming an essential insurance for people who want to access quality medical care while balancing
their budget. It offers cover for the copayments, sub-limits, and medical expense shortfalls that increasingly occur for a premium of only a few hundred rands a month. Companies can access group gap cover, which gives employees access to discounted monthly premiums as well as favourable underwriting, including waiving typical gap cover limitations such as waiting periods.
With gap cover in place, employees can get the medical care they need without the stress of the large financial burden that medical expense shortfalls can incur. Some gap cover providers also offer added value in the form of trauma counselling and other benefits. This means they will be healthier and happier in body and mind, which translates into more productivity in the workplace. In addition, employers will not have to provide company loans to assist employees in paying for copayments, sub-limits, and shortfalls. This is a significant reduction in admin.
Becoming an employer of choice
For employers looking to add value for their staff in a cost-effective manner, subsidising gap cover premiums can make a massive and meaningful difference, which can tip employers over the edge when it comes to attracting and retaining the best talent. Working with a broker, employers can educate employees as to the benefits of having a gap cover policy in place, help them ensure they are on the best medical aid for their needs and budget, and then match the gap cover option to this.
Even if companies cannot afford to subsidise the premium, it can still be hugely beneficial for staff, as it costs employers nothing, while employees access the benefits of reduced premiums and the peace of mind and financial benefits that having gap cover provides, as well as cover for their entire family. It is a simple process that can be done via payroll deduction, with the gap cover provider sending a single invoice for a single payment every month, and it can make a world of difference for employees.
Employee incentive programmes can help revenue growth and business sustainability
BY KINOLA PATHER CEO of Randgo
In today’s challenging business landscape, where success hinges on employee engagement as much as it does on customer satisfaction, staff incentive programmes have emerged as pivotal tools for fostering engagement, rewarding transformation, driving productivity, and nurturing both individual and organisational growth.
Here’s why every business should consider implementing an employee incentive programme:
They bring a yin-yang effect to play. A symbiotic relationship arises between motivated employees who feel they are recognised and rewarded, and companies that see a positive impact on their bottom-line and, in turn, plough profits back into further incentives. In fact, Mckinsey quotes real-life examples that show how, when implemented and managed properly, employee incentive programmes can become self-sustaining in terms of costs before the first incentives are even paid out.
The numbers speak for themselves. Studies show that companies that implement incentive and rewards programmes see an average increase in productivity of 22%, while those that use incentives to recognise and reward employees for their contributions and achievements report higher levels of employee engagement (89%), retention (87%), and loyalty (85%) compared to those that do not use incentives. Harvard Business Review has found that companies that use incentives to reward employees for meeting specific goals or targets see an average increase in revenue of 44%.
There’s a programme for every business need. There’s no one-size-fits-all approach for employee incentivisation; it’s a diverse spectrum that must be tailored to motivate the specific group being targeted. After all, one company’s structure and strategic objectives are not the same as any other company’s.
Furthermore, while many perceive incentivisation as being solely geared towards sales teams, the reality is far more expansive. Every individual in an organisation plays a crucial role in driving bottom-line results. From sales representatives to HR, IT and finance teams, and everyone in between, each employee or team contributes in their own way to a company’s success. With this in mind, incentives should be tied to outcomes that are within a team’s grasp rather than distant outcomes.
Incentives tap into proven psychological principles. At its core, incentivisation intertwines behavioural change with reward systems. While research suggests that money isn’t the main motivator, current economic realities underscore its significance. But employees don’t just want higher compensation. They also want recognition from leadership for the work they accomplish and opportunities that allow them to improve themselves, both personally and professionally.
You do not need to do it alone. A major South African logistics provider has seen a “measurable improvement” in performance since it partnered with Randgo, in 2021, to implement a custom programme that both rewards and recognises employee excellence against targeted metrics. Customer feedback and internal measurements are used to determine monthly and quarterly winners, who are recognised by management in the presence of their peers. The programme’s success can be attributed, in part, to the builtin feedback and adjustment loop that ensures it remains relevant and continues to meet its objectives.
Randgo works with clients across the spectrum to develop tailored employee and customer loyalty, reward and incentive programmes that are designed to positively impact on both behaviour and sentiment. Sourcing and supplying the physical rewards are just one aspect of what we do. As a first step, we work with our clients to assess their needs and goals, and then determine the most effective and cost-effective way to achieve these goals. From there, we can provide end-to-end support that includes internal marketing services to secure employee buy-in, as well as other specialist functions like tech capabilities and operational support.
Our most important advice is that short-term interventions will not create lasting behavioural change. Sustainable incentive programmes transcend immediate rewards to nurture long-term engagement and the formation of new habits. Whether through financial incentives, recognition schemes, or career development opportunities, employee rewards should – and can – encourage a culture of continuous improvement and achievement.
These major risks will reshape employee landscape in South Africa
According to a new report from Mercer Marsh Benefits, a global employee health, benefits and people risk adviser and part of Marsh McLennan (NYSE: MMC), organisations in South Africa face a range of employee-related risks – which could, if left unaddressed, have a dramatic impact on their future success.
Mercer Marsh Benefits’ global report, People Risk 2024, draws on the views of 4 575 human resources (HR) and risk professionals – including more than 100 participants from South Africa – and ranks risks by likelihood and severity across five key pillars: technological change and disruption; talent, leadership and workforce practices; health, wellbeing and safety; governance, compliance and financial; and environment, sustainability and protection.
businesses collaborate with leaders across their organisation to understand the advantages and risks of AI, evaluate uninsured scenarios, encourage safe adoption, and build a digital-first people strategy.
“People are an organisation’s most important asset, but they can also expose businesses to risk”
According to the research, just 29% of respondents in South Africa have effective employee upskilling on the appropriate uses of AI and automation in place; 43% have this in place but it needs improving; and 21% plan to implement this in the next one to two years. To address AI people issues, Mercer Marsh Benefits recommends
Marsh McLennan’s Africa and South African Chief Executive Officer, Spiros Fatouros, says, “People are an organisation’s most important asset, but they can also expose businesses to risk without the right culture, policies and training. Failure to ensure people are properly supported and trained opens businesses up to severe risks, which can have wide ranging consequences. The good news is that by focusing on people in the context of each of the risk categories, organisations can have a measurable impact on mitigating and reducing risk.”
Respondents from South Africa broadly appear to exhibit a higher level of concern regarding people risks than their global counterparts, and view HR and risk functions within their organisation as important to both mitigating and addressing risk.
Among the key findings, 25% of respondents view
Mental health is likely to be the next global pandemic
BY DR JESSICA HUTCHINGS Head of Prevention at Rand Mutual Assurance
Mental health issues are likely to be the next global pandemic, with the World Health Organisation (WHO) estimating that globally one in every four people will be impacted by mental illness at some point in their lives. An approximate 350 million people worldwide suffer from depression and the WHO estimates that each year an estimated 700 000 people take their own lives – compared to 619 000 people killed by malaria.
According to an analysis by Statista, there is a growing demand for mental health services in South Africa, due to several factors. These include “increased awareness and understanding of mental health issues, changing attitudes towards seeking help for mental health problems, and a greater recognition of the importance of mental wellbeing”.
Dr Jessica Hutchings, Head of Prevention at Rand Mutual Assurance, believes that the Covid-19 pandemic has had a profound impact on drawing
much greater attention to mental health issues, with the first year of the pandemic seeing the prevalence of anxiety and depression increasing by a staggering 25%. “I think Covid-19 – and the impact it had from a psychosocial perspective on people living on their own and not being able to interact with others – has created a lot more awareness around mental health,” says Dr Hutchings. “In addition, we cannot forget the stress and anxiety suffered by many as a result of lockdown constraints on people’s ability to work, engage in their communities, and seek support from loved ones during the pandemic.”
Dr Hutchings notes that should mental health become the next global pandemic (if not here already), it is likely to have a severe impact on the workplace. Mental health-related issues can result in a drop in productivity and work performance, as well as poor working relations among colleagues and increased absenteeism, presenteeism, distraction and stress
“Should mental health become the next global pandemic, it is likely to have a severe impact on the workplace”
technological change and disruption risks as the biggest threat to their organisation in the short term (one to two years). 35% of respondents are concerned about failure to comply with AI-related regulations resulting in legal and financial risks to the organisation. A further 46% are concerned about employees’ inability to access needed healthcare due to possible damage to community infrastructure following natural disasters and extreme weather.
Mercer Marsh Benefits’ African Regional Offices Leader, Travis Briscoe, adds, “South African businesses have seen firsthand the impact that climate-related risks can have on their operations, but this also extends to their people. Through greater collaboration and careful risk planning, businesses can start to narrow the risk protection gap and work together to build a risk management culture.”
About People Risk 2024 : The People Risk 2024 Report was generated from a survey of over 4 500 risk and HR professionals from 26 countries. Fielded from October to November 2023, the survey captures the greatest people risks facing organisations, and how risk and human resources managers can collaborate to limit organisations’ exposure and mitigate risk. Twenty-five people risks were analysed across five categories: technological change and disruption; talent, leadership and workforce practices; health, wellbeing and safety; governance, compliance and financial; and environment, sustainability and protection. Risks were calculated and ranked by a Risk Rating Score (RRS). RRS is a numeric score that captures the likelihood of a risk impacting an organisation in the next two years and the severity of its impact on the business if it occurs.
while also compromising workplace safety. Furthermore, mental health can also contribute to knock-on concerns such as substance abuse, financial woes, legal issues and family troubles, emphasising the need for holistic wellness solutions in the workplace.
“Wellness is about ensuring that people are not only fit for duty but also fit for life. It really is about mental fitness. That’s why we now hear about things like presenteeism, where people are physically present at work but are mentally absent due to distractions, stress and worry,” she says.
“If a person’s emotional state starts impacting their ability to perform properly at work, they should consider talking to their manager about it, especially if their work environment is contributing to the problem.” However, Dr Hutchings notes that many people are hesitant to talk to others about their mental health, especially their managers or employers. They could be afraid that they will be negatively judged, their reputation will suffer, or their career will be damaged.
“There is still a lot of stigmatisation associated with mental health issues, which could prevent many people from
seeking help. Stigmatisation is often tied to cultural views and beliefs about mental health, which only compounds the problem,” she says.
“For example, signs of mental health-related issues in men often do not correlate with what is traditionally expected from a man. Men are taught to be strong and masculine and to suffer in silence because mental health issues could be construed as weakness.”
Such attitudes not only hinder men from seeking the help they need but can also lead them down a path of destructive behaviour at a time when men’s mental health problems are frequently exacerbated by factors such as unemployment, job scarcity and the rising cost of living.
“Many South African employees find when it comes to mental health issues in the workplace, employers do not see it as a priority, or even as a factor that requires proactive measures. Employers must take the time to educate themselves about mental health and how they should manage employees who suffer from depression and anxiety,” Dr Hutchings concludes.
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Employee benefits for the modern workforce requires a fresh approach
BY YOSHNI GOVENDER Head of Human Capital at Momentum Corporate
In a dynamic and competitive environment like South Africa, agility is not just a desirable trait for employees but also a necessary quality for employers when adapting benefit programs to meet evolving needs.
According to Yoshni Govender, Head of Human Capital at Momentum Corporate, employee benefits are a strategic investment in human capital. “A comprehensive and flexible employee benefit programme can help employees cope with the challenges and opportunities they face in their personal and professional lives.”
Changing the benefits game
Rethinking employee benefits, Govender says, is pivotal for attracting and retaining top talent in today’s market. Employees seek more than just a paycheck; they are looking for employers who prioritise their holistic wellbeing and support their growth and aspirations. Customising benefits demonstrates an employer’s commitment to understanding and meeting employees’ individual needs and preferences.
Artificial intelligence (AI) emerges as a crucial tool in this customisation process. AI can analyse vast amounts of data on employee behaviour, preferences and feedback to tailor benefits in a personalised and engaging manner. Interactive platforms powered by AI, such as chatbots, mobile apps or online portals, provide employees with guidance, reminders, alerts, and nudges to optimise their benefit usage and achieve their goals effectively.
Govender believes benefits are a good first step, but engagement is the ultimate prize. “Engaged employees are not only more productive, motivated and loyal, but also more innovative, creative and collaborative. They are more likely to share their ideas, contribute to problem-solving, and seek feedback. They are also more satisfied with their work, which reduces turnover and absenteeism rates.”
“Providing tailored benefits and financial literacy programmes is one way to foster employee engagement and wellbeing”
Providing tailored benefits and financial literacy programmes is one way to foster employee engagement and wellbeing. Govender says these benefits address the specific needs and preferences of different segments of the workforce, such as millennials, women, parents or even remote workers.
“Financial literacy programmes can complement benefits by educating employees on how to budget, save, invest and protect their income – ultimately helping them achieve their financial goals and nurture a culture of financial inclusion and empowerment within the organisation.”
The bare minimum is never enough The minimum range of benefits should not only include basics like paid leave, maternity support, retirement fund, group risk cover and medical aid, but also additional benefits that enhance quality of life and performance.
“The key is to offer employee benefits that are meaningful, relevant, and aligned with the organisation’s vision, values and goals,” says Govender.
A comprehensive benefits package that includes both essential financial protections and softer benefits like mental health support is ideal. Govender says this demonstrates an employer’s commitment to the wellbeing of their workforce.
How should employers rethink their benefits offering?
Rethinking employee benefits is a strategic imperative that requires a thoughtful approach. “We begin by assessing the current landscape of employee needs and preferences,” advises Govender. “This involves rigorous benchmarking against industry standards and engaging with our workforce to understand their evolving expectations.”
He says segmentation plays a crucial role in catering to the diverse demographics and life stages within an organisation. “Consulting with HR experts, benefits consultants, and most importantly, employees, ensures that any changes we propose are well-informed and resonate with the majority of the workforce.”
Financial considerations are also paramount. The costs of enhancements are always weighted against the anticipated returns in employee satisfaction, retention and productivity. Govender says clear and transparent communication is key throughout this process, ensuring employees understand the rationale behind the changes and how they stand to benefit.
Ultimately, Govender believes by working together, employers, service providers, and financial advisers empower employees to maximise the value of their benefits. “This not only enhances employee satisfaction but also strengthens the employer-employee relationship, fostering mutual support and engagement within the organisation.”
The present trap: Why short-term thinking hurts long-term financial health
BY FIKILE MBHOKOTA CEO of Satrix
In South Africa’s consumption-focused culture, where many struggle to make it to month-end and stokvels tend to cash out come December, there are perpetuating cycles of present bias.
Preoccupation with the present leaves little room to invest in the future. Shifting to a longer-term money mindset will require a strong emphasis on financial education, literacy, learning, and of course, a change in mindset.
The field of behavioural science defines present bias as the tendency to skew decision-making toward the present situation rather than the future. It’s the inclination to favour immediate rewards over future benefits, which can often lead to poor financial planning and decisionmaking. This behaviour is partly driven by a desire for instant gratification.
For those who have created opportunity after experiencing prolonged financial hardship, it is important to find a balance between accessing luxuries and creating lasting wealth through investment. Buying an expensive car or splurging on nonessential items can provide a temporary sense of fulfilment but can result in longterm financial instability.
Moving beyond present bias
It starts in childhood
To counteract present bias, it is essential to focus on long-term financial planning from a young age. Integrating financial education into school curriculums and encouraging discussions about money management at home can lay a solid foundation for future financial decisions. Children who grow up understanding the importance of longterm investments and the power of compound interest are more likely to adopt healthier financial habits as adults.
Children learn through observation, and they see us spending, but don’t necessarily observe us saving or investing behind the scenes. It’s critical to speak through these behaviours. For example, my children love using mouthwash; they were going through a bottle a week until I explained to them that mama cannot afford a new bottle each week, so they must make it last for at least a month. Teaching kids that money can be a finite resource if not well managed – and when it’s finished, it’s finished – is a critical life lesson and supports living within one’s means. It’s important for them to understand that one of the ways to grow the money they have is through saving and investment.
We also need to talk about investing. By telling children we’ve started a SatrixNOW investment for their education, for example, and showing them how it’s growing, we let them experience compound interest early on. Talking openly about investing starts to shift mindsets to longer-term thinking during formative childhood years, when ‘money scripts’ are made. We’re not just saving for December; we’re saving for in 20 years’ time.
Later in life
Dr Mavis Mazhura – author, international behavioural science, and performance specialist – suggests training delayed gratification in children’s formative years. She also advocates for people’s exposure to money cycles of repairing (repairing ‘unhealthy’ money relationships), earning, managing, investing, and protecting one’s wealth, along with robust financial planning and goals.
Financial literacy programmes and investment clubs can provide valuable resources and support to encourage adults to adopt a long-term perspective on their financial goals. I joined an investment club at a young age, where we’d take turns nominating an exchange-traded fund
“If you’ve come from a family in a cycle of present bias, it’s hard to break this mindset”
(ETF) each week. Having the courage to have these conversations with friends and family can make a massive difference. We don’t talk enough about equal access to wealth creation in this country. If you’ve come from a family in a cycle of present bias, it’s hard to break this mindset. There are many cases where people get access to money, and then don’t know how to manage it. Again, that’s where access to financial literacy, the right advice, and tools can change individuals’ stories for the better.
Just start
For individuals living from paycheque to paycheque, it can be difficult to think beyond immediate financial pressures. In such cases, start saving and investing small amounts to form a sustainable habit over the long term. As their financial situation improves, those savings and investment contributions should increase as well. People only really start to appreciate the magic of compound interest when they experience cumulative returns for themselves. With SatrixNOW, you can invest as little as R1, breaking the barriers to investing.
Adding to this, Dr Mazhura says that people in survival mode tend to shy away from behaviours like learning, goal setting, and seeking financial advice –behaviours which, if adopted, could lead to longer-term mindsets. In this survival mode, self-awareness is eroded as anxiety creates urgency, prompting immediate consumption, with little capacity for delayed gratification.
Breaking this cycle takes the psychological capacity to integrate positive financial behaviours like investing, which requires emotion management. Shifting to longer-term strategies also takes education and awareness, exposure to success stories, and taking care of the easy ‘wins’ by automating savings, for example.
Surmounting cycles of debt
Another critical aspect of overcoming present bias is addressing the high levels of debt many individuals face. High-interest debt can be a significant barrier to saving and investing. Educating consumers about their rights and options, such as negotiating lower interest rates and consolidating debt, can help alleviate some of their financial burdens. People need to appreciate the power they hold as consumers and assert this.
Another factor contributing to present bias is the proliferation of products and schemes promising quick returns. These often prey on individuals’ desires for immediate gains. Promoting a culture of informed and cautious investing – where individuals understand that sustainable wealth-building requires time and patience – is essential. As is instilling the custom of living within one’s means. Cultures of consumption can make room for ‘Mashonisas’ (a loan-provider) and spiralling cycles of high-interest debt. By fostering financial literacy, encouraging long-term goal setting, and providing practical tools for managing finances, we can help individuals break cycles of present bias and invest in long-term wealth accumulation, not only for themselves but for the next generation. Empowering people to make informed financial decisions benefits them personally and contributes to the broader economic health of our society. It is a collective effort that requires action from individuals, communities, and policymakers alike to create a financially resilient future.
A behavioural finance lens on the question: Are women better investors?
BY PAUL NIXON Head of Behavioural Finance at Momentum Investments Group
The renowned behavioural finance research duo, Barber and Odean, published a paper in 2001 entitled ‘Boys will be boys’, which ruffled a few feathers. They studied and reported on the performance difference men versus women generated on their investments. Not only did they find a statistically significant difference in favour of women, but they also found that men had better investment performance in the mere presence of women. However, single men underperformed significantly more. It doesn’t stop there. Forbes reported in 2023 that female hedge fund managers have the edge over their male counterparts. The reasons for both of the above findings were in principle attributed to men’s overconfidence and excessive
1. The switch itch: The average number of switches (disinvesting from one unit trust and investing in another) by men is two per year. Women switch 5% less than their male counterparts.
experienced a behaviour tax that was 20% lower than men.
trading in portfolios, i.e. making more decisions and, as a result, underperforming.
Momentum Investments has been studying investment behaviour in various contexts since the onset of the Covid-19 pandemic, and has established a metric that tracks the value eroded from investment decisions. We call it a ‘behaviour tax’. We’ve also established machine learning techniques that study behavioural patterns and how these patterns impact the behaviour tax of the investor population. We decided to put these claims to the test in South Africa using these metrics (and some others).
When examining investors in unit trusts (the Momentum Flexible Investment Option) from 2020 until the end of 2023, the following interesting results emerged:
2. Overconfidence: The trend of chasing past performance when markets show signs of recovery is still very prominent. Here the overconfidence of men is equally prominent. We measure the overall extent to which men and women up-risk and de-risk their portfolios by tracking their asset allocation over time. This is the mix of stocks, property, bonds and cash (both local and offshore) that they hold in their portfolios. When men hit the accelerator during market performance, they hit it much harder. Their portfolios contain more risky asset classes during these periods (stocks and property) than their female counterparts. This is confirmed by a larger portion of men in the ‘Assertive’ investor archetype that consistently up-risks their portfolio.
3. The behaviour tax: Since the onset of the pandemic, the behaviour tax has plagued South African investors. This means that when performing a switch from one unit trust to another, investors in general are destroying value. Since Covid, men have experienced an average behaviour tax of a staggering 4% per year. Women, however,
Why do we listen to our hearts rather than our heads?
BY SIOBHAN CASSIDY MoneyMarketing Contributor
Facts are the investor’s friends, say the experts, but there is no point pretending that people can simply keep their feelings separate from their investment decisions. It is better for investors and their advisers to acknowledge feelings, understand the risks, and design plans that mitigate against them.
Investors are told to ignore the noise, the headlines and the market turbulence. Even when things look like they are going to hell in a handbasket, they are urged to keep their eyes fixed on the fundamentals and on the long term. So why do so many find it so difficult to fight the urge to respond and take action quickly (‘Sell sell sell,’ investors hear their instincts shouting)? “Because we are wired that way,” says Paul Nixon, Head of Behavioural Finance at Momentum Investments Group. “From an evolutionary standpoint, this makes sense as during stress in the past we needed a quick reaction and not logical deliberation.”
Linda Eedes, Investment Professional at Foord, agrees that “it has to do with evolutionary psychology”. She says, “Fear is a very basic survival mechanism. As a response to perceived danger, it’s very useful. As a species, it has served us well, but it can result in poor decision-making with regards to our investment decisions.”
Kurtney Durgaparsad, Technical Investment Specialist at Alexforbes, says, “Humans are inherently emotional beings, so removing all emotion from financial decisions is unrealistic.” Unrealistic but somehow necessary, it seems, considering that, as Durgaparsad adds,
“Looking at retirement funds, our insights show that members who actively switch between investment portfolios of their choice (whether to time markets –chase performance or avoid losses – or in response to emotions) typically lose around 2% and 3% per year.” Durgaparsad goes on to explain that the consequences of this “can be quite severe if you consider that every 1% additional return over a 40-year retirement savings period can translate into one’s pension lasting between two to five years longer in retirement”.
“Members who actively switch between investment portfolios typically lose around 2% and 3% per year”
Nixon gives more detail on the damage that emotional decision-making can cause to investments, pointing to a so-called ‘behaviour tax’ tracked by Momentum. This metric, he says, shows (since the Covid period) “approximately 3.5% per annum in lost returns through investors reacting to market news and events”. The damage extends beyond individual investors, he says. “Over time this erodes confidence in financial advice and the industry in general, especially considering that market returns in the last decade have
Finally, we put this question to bed by examining which group experienced better investment returns. We included the entire population, both switchers and nonswitchers (people who stayed invested). The net result is that women tend to outperform their male counterparts by nearly 30 basis points or 0.3%, which is a similar result to global studies on this topic.
The answer as to whether women are better investors appears to be a resounding ‘yes’. It should be noted, however, that markets have provided a distinct return pattern in the past number of years that likely didn’t reward overconfidence. The debate will likely continue, but women have definitely won this round.
For more about our research and insights, visit our website here: https://www.momentum.co.za/ momentum/personal/investments/invest/ about-us/understanding-investor-behavio ur?rcid=understandinginvestorbehaviour
Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP 6406) and registered credit (NCRCP173) provider.
https://www.forbes.com/sites/timmaurer/2023/04/30/whywomen-are-better-investors-than-men/?sh=1ac446b8799d 2 For more detailed descriptions of the various investor archetypes, download the Momentum Investments Sci-Fi report here: chrome-extension:// efaidnbmnnnibpcajpcglclefindmkaj/https://sls-fresco. momentum.co.za/files/documents/invest-and-save/updatesand-news/from-the-experts/sci-fi-report-2023.pdf
struggled to track inflation even.”
The consensus among experts is clearly that emotional decision-making is bad investing practice. However, Eedes agrees, there is no use trying to keep feelings out of investments. “Rather than trying to fight emotions, as investors, we must understand that we are emotional beings. The best way to protect against making poor decisions when we’re feeling very emotional is to have a sound investment strategy in place.” As an individual, she says, that might mean working with a financial advisor to “understand what you are at risk of doing in those times of market stress and to put in place the means to protect yourself”.
An adviser will help clients to separate emotions from their decision-making process, making them aware of the risks and the common mistakes investors make, and helping them to stick with their plan even when their gut is telling them to change course. A good rule of thumb at these times, says Nixon, is to remember that if your investment goals aren’t changing, neither should your approach to reaching them (i.e. your investment strategy). “Ask yourself if your goals are changing, or if this is just a reaction,” he says.
“Staying rational as an investor is a proactive rather than reactive journey,” says Eedes. “Smart investors do deliberately structure their lives and design the investment process to protect themselves from the type of toxicity in the market that could cause them to behave irrationally or emotionally.”
The rise of alternative risk financing solutions
BY JULIE SMITH Corporate Strategic Account Manager at Aon South Africa
We live in a volatile world where geopolitical risks, economic inflation, natural disasters and an increasingly complex regulatory environment are applying pressures on all fronts, including the insurance sector. Underwriting requirements are becoming stringent, and prospective clients are having to provide far more granular information about their portfolio of risks as well as risk-mitigation measures, while reduced capacity and insurer appetite for certain classes of risks remain a real concern.
According to Julie Smith, corporate strategic account manager at Aon South Africa, businesses may be surprised to find that renewals are much tougher than before, with risks that were previously covered now either being uninsurable or attracting onerous terms, conditions and hefty deductibles.
“Securing sufficient insurance capacity from local and global insurers continues to be challenging. Hardening insurance market conditions are the cause of reduced reinsurance capacity and appetite, which means that traditional insurance solutions are becoming unaffordable, or in some cases, the risk has become uninsurable,” says Julie.
The insurance market is, however, more amenable to businesses that take greater ownership of its risk mitigation by deploying proactive risk strategies and risk sharing through increased deductibles that can in turn be funded through alternative risk financing solutions. This is achieved by either incorporating a captive insurance solution or implementing an aggregate fund, or a combination of the two,” Julie explains.
Captive insurance defined
Captive insurance solutions are valuable tools to navigate volatile market conditions in terms of risk financing and filling the widening gaps in coverage, especially in challenging risk markets such as cyber, property, terrorism, sabotage and weather catastrophes.
“A captive is effectively an insurance company that is set up by the business primarily to self-insure against its own specific risks, which allows the business to take financial control of its insurance allocations. If the business is running mature risk management programs, hand in hand with risk consulting solutions, it may be able to rather consolidate its premiums instead of simply paying them away on traditional insurance, leveraging it to build
“Hardening insurance market conditions are the cause of reduced reinsurance capacity and appetite, which means that traditional insurance solutions are becoming unaffordable”
scale within a captive,” Julie explains. Adding captives to an organisation’s risk financing toolkits starts by assessing the total cost of risk and the optimal program design to strike a balance between risk retention and risk transfer. It allows the business to take on a sizable increase in its risk retention level because the business has ultimately reinsured its own risk. The business is then able to partner with a risk financing partner to lock down an insurance policy with more favourable terms and deductibles.
“Having a captive arrangement in place is an attractive drawcard that the business brings to the table in terms of risk retention levels for actuaries to factor into the equation alongside the organisation’s past claims history. It makes most sense when the actuarially calculated expected losses are significantly lower than the premiums and deductibles set by a traditional insurer,” Julie explains.
Aggregate funds
An alternative to a captive solution is an aggregate fund, where the business approaches the insurance sector to set up a contingency fund for things that are not necessarily insurable. In this scenario, the business essentially invests in an aggregate excess that puts money into a risk-financing house. An example would be a big fleet company that has an aggregate excess plan with a stop loss attached to it.
An aggregate excess is the overall retention fund for the client. In this example, the fleet operator has put a R10m aggregate excess on a fleet of 1 000
trucks. Considering the business’ claims history, they would be able to secure a better insurance premium by taking more of the risk on themselves.
Within the aggregate excess there could be protection for the client by way of a stop loss where the insurers will agree to pay for any one loss over a specified limit. For example, within your R10m aggregate excess, you may have an R500k stop-loss agreement, which means the business will only ever pay for a single insured loss up to an R500k limit – anything above that would be carried by the insurer.
“The aggregate fund still forms part of the contract with the insurer and claims to the fund are treated like any other, duly assessed and documented by the insurer. The key benefit of an aggregate fund for the business is its ability to manage its claims better, and money left in the aggregate fund can be transferred to the following year,” Julie explains.
Insurers tend to be more amenable to businesses that proactively finance, retain and manage more risks themselves. As a result, businesses require increasingly sophisticated risk modelling solutions to support informed decision-making on risk financing alternatives such as captives and aggregate funds, to optimise the total cost of risk. Striking the balance between financial analysis and risk engineering is a high-stakes and complex task, best undertaken with the guidance of professional risk consultants who have the capacity and expertise to enable better decisions around alternative risk financing solutions.
Evolved life cover products stand out in a staid market
BY NIC SMIT Chief Product Actuary at Bidvest Life
The Covid-19 pandemic highlighted the need for the life insurance industry to change. It pushed us to expand our services to better meet our clients’ needs by adapting to societal changes and finding ways to cover more risks and provide more value to our clients through tailored solutions.
When it comes to life cover, there are two major challenges with the industry today: First, insurers need to move beyond the traditional lump sum product offering. Second, they need to find ways to differentiate and individualise their offering. This is possible by developing innovative products that enable financial advisers and their clients to cover specific needs, rather than choosing from a bucket of similar products whose only real differentiating factor is price.
The solution lies in developing new products or enhancing existing products to solve real problems and deliver tangible value, based on actual insights.
HBy creating a continuous feedback loop involving everyone in the value chain – including employees and financial advisers who interact with clients regularly – and then interrogating the results, insurers can identify trends and develop products that fill the gaps.
“The solution lies in developing new products or enhancing existing products to solve real problems and deliver tangible value”
Take Life Income benefits as an example. In 2013, Bidvest Life introduced Life Income benefits as an alternative to lump sum payouts. Lump sums can be hard to manage due to investment risks, longevity, inflation, and the temptation to spend a lump sum on non-essential items. Life Income benefits offer a more
manageable alternative. They mimic the income stream that you are trying to replace when you’re no longer around so that your dependents are looked after when they need it the most, they simplify estate planning, and they are more affordable. This approach is particularly relevant in South Africa, where every working person supports themselves and an average of three dependents*
While insurers try to pay out life cover lump sum claims within a reasonable time frame, non-disclosure complications can lead to payments being drawn out, and such delays can seriously impact on beneficiaries’ shortterm finances. For instance, if the life insured’s bank account is frozen, the spouse may be unable to buy groceries or pay school fees. Or a self-employed
surviving spouse may need to take some time off but cannot afford not to earn an income during this time.
To address this immediate financial need, Bidvest Life has introduced the Life Priority benefit as a rider to the Life Lump Sum benefit. This benefit has reduced the checks that need to be completed for non-disclosure for deaths that occur after the first two years of cover. This means that where the payment of the main life insurance benefit is delayed because non-disclosure checks need to be completed, the Life Priority benefit will often be able to pay out earlier, which eases the pressure on the policyholder’s family.
For financial advisers, having access to life cover products that offer more relevant benefits, insure broader risks, and provide claim certainty when clients need it the most, can help you gain a competitive edge that goes beyond just pricing.
* Source: SA Institute of Race Relations.
5 essential insurance policies for South Africans
BY VELMAH NZEMBELA Head of Group Corporate Affairs, Assupol
aving the right insurance policies is important so that your clients can shield their future and ensure peace of mind. For South Africans, particularly those looking to secure long-term stability, certain insurance policies are not just beneficial but fundamental. Here are five key insurance policies that every South African should consider, as recommended by Velmah Nzembela, who is the Head of Group Corporate Affairs at insurance provider Assupol.
1 Life Insurance
Life insurance is the cornerstone of any comprehensive financial plan. It provides a financial safety net for loved ones in the event of untimely death. This insurance ensures that a family’s financial needs, such as living expenses, mortgage payments and educational costs, are taken care of even when the client is no longer around to provide for them.
2 Disability cover
Disability insurance is another critical policy that protects income if a person is unable to work due to a disability. In a country where the cost of living continues to rise, losing the ability to earn an income can be devastating. Disability insurance provides a monthly income, ensuring that a standard of living can be maintained and covers essential expenses during difficult times.
Disability insurance policies offer robust coverage, helping an individual to focus on recovery without the added stress of financial strain. In some instances,
the policies can be customised to suit specific needs, ensuring comprehensive protection.
3 Critical illness cover
The world is becoming more and more fast paced, and the incidence of critical illnesses such as cancer, heart disease, and stroke is unfortunately on the rise. Critical illness cover is designed to provide a lump-sum payment upon the diagnosis of a serious illness. This financial support can be used to cover medical expenses, treatment costs, and any other financial burdens that may arise during such a challenging period.
The critical illness cover is crafted to offer substantial financial assistance, helping an individual focus on health and recovery without worrying about the costs.
4 Funeral Insurance
Funeral insurance is an often-overlooked yet essential policy that covers the costs associated with funerals and burials. In South Africa, where cultural and family traditions play a significant role, a dignified funeral is important. Funeral insurance provides a lump sum to cover funeral expenses, alleviating the financial burden on families during their time of grief. A comprehensive funeral insurance caters to the specific needs of South African families.
5 Retirement savings
Planning for retirement is crucial, especially in a country where economic uncertainties can affect longterm financial stability. Retirement annuities provide a steady income stream during retirement years.
When affordability’s under pressure, needs-matched funding patterns can deliver long-term sustainability
BY CLYDE PARSONS Chief Innovation Officer, BrightRock
We are facing a global cost-of-living crisis. With affordability under pressure, clients and advisers are actively comparing premiums between different providers to find the cheapest premiums. One of the levers that financial advisers have at their disposal to address the affordability of cover is premium funding patterns. However, clients and financial advisers need to weigh up both the short-term affordability as well as long-term sustainability of premiums, as there is essentially a trade-off between initial premium affordability and the long-term affordability of cover and premium increases. In principle, the most costefficient funding pattern over time is the least aggressive option, as it’s also the most sustainable funding pattern.
“The full premium increase percentage is guaranteed for 10 years”
However, clients often opt to ‘buy now, pay later’ through a lower initial premium – and a lower initial level of cover – which then increases aggressively with age.
These age-rated funding patterns (even when age-rating wasn’t specifically selected) are among the most prevalent funding patterns in the market, even though they are, for
the most part, neither efficient nor sustainable. A study published by BrightRock and True South Actuaries in 2012 showed that most people with an age-rated funding pattern would end up with unsustainable premium increases or insufficient cover, or both. This is because, as premiums increase and become increasingly more expensive, clients are likely to buy down or lapse their cover owing to affordability constraints.
Compounding this problem is the complexity and confusing terminology that surrounds premium patterns in the industry. For example, a ‘level’ funding pattern may, in fact, be age-rated. A financial adviser who has quoted their client on a yearly cover increase of 5% and a 5% compulsory premium increase, may be forgiven for expecting their premium will increase by 5% every year to pay for the 5% increase in cover. At worst, they might expect a 10% increase to fund the cover increase plus the compulsory premium increase. In most instances, however, if cover is added with a scheduled annual cover increase, it will be priced for the client’s age at the time of the increase (and with many providers, this component of the premium increase isn’t guaranteed, despite the contract containing a premium guarantee). In other words, age rating applies even though most insurers would not call this an age-rated premium pattern. What’s more, this age-based rate will typically increase every year as the
client gets older and be added to the 5% compulsory increase. So instead of the 5% or 10% premium increase implied by the 5/5 funding pattern, the client’s actual yearly increase could be anything between 11% and 13%, with their premiums becoming unsustainable in just a few years. Therefore, before selecting the cheapest premium, it’s vital that advisers and clients check how much they will be paying in years to come.
When BrightRock entered the market, we identified premium funding patterns as an area where insurers have too often failed to treat clients and advisers fairly. To address these shortcomings, our product design aims to offer clients predictable, consistent premium increases that are clearly disclosed through detailed premium projections that show both the rand amount and percentage increase. The full premium increase percentage is guaranteed for 10 years, irrespective of cover increases, and we have opted not to brand our premium patterns, as we believe in names that tell clients what to expect. For example, if a client has a 5% cover increase and a 5% premium increase, both their cover and their premiums will increase by 5% each, every year. This approach helps to demystify premium patterns for clients and advisers alike, supporting informed decision making, and promoting the long-term financial viability and downstream affordability of their funding patterns.
When life brings change, keep your insurer informed
BY SUSAN HUNT Chief Actuary at Nedbank Insurance
The real value of vehicle and household insurance is that it offers peace of mind, allowing clients to go about their daily lives in the knowledge that the value of prized possessions is protected. It’s a quiet assurance that there is protection to help navigate life’s uncertainties.
Susan Hunt, Chief Actuary at Nedbank Insurance, emphasises that clients need to understand that having an insurance policy also comes with an obligation to take proper care of possessions, act responsibly, and keep insurers informed of any changes in lives or circumstances that could affect cover.
Clients need to be educated on these issues. “It’s essential to remember that when their life changes, insurance may have to change too. They must stay in touch with their insurer and keep them updated on anything that could change their risk profile,” Hunt explains. She further points out that keeping their insurer informed is not just good advice – it’s a critical responsibility that, if not fulfilled, could prove very costly when the time comes to claim.
An example: Let’s say they’ve decided to add a new room to their house, like adding a patio, or doing some enhancements to their vehicle. These are substantial changes that can alter the terms of insurance coverage. If they don’t notify their insurer, they may find themselves underinsured – or not even covered at all. “Imagine the financial implications of discovering too late that their new home extension is not covered –simply because they didn’t notify their insurer and ask them to update an insurance policy,” she adds.
And it’s not just about losing out on some money when the time comes to claim. Failing to update an insurer can lead to even more severe consequences, like a potential breach of an insurance agreement, which could see a future claim rejected entirely.
useful opportunity to check cover and update it to fit a client’s current situation. “Like life, insurance is not static. It’s a dynamic contract that needs to constantly evolve as life progresses. Keeping an insurer in the loop prevents any surprises and allows them to check that cover is still sufficient if things have changed,”
Hunt adds.
“Keeping their insurer informed is not just good advice – it’s a critical responsibility”
It is vitally important to ensure clients understand the terms and conditions of an insurance policy. Hunt also says that notifying an insurer of a change is a
Hunt highlights that there’s a vast spectrum of changes that could affect all insurance policies – not just home and vehicle cover. Alterations to property, moving home, buying new household items, changing jobs, or a shift in personal circumstances like marriage, childbirth, or an inheritance – all these can have a significant impact on the various types of insurance cover.
“It’s valuable to understand that insurance is much more than just a product; it’s a partnership between client and insurance provider. Clients must actively participate in keeping cover in line with their needs.”
Is your finely crafted financial plan a grand masterpiece?
Or will it be let down by traditional life insurance products that don’t match your clients’ needs?
As a highly skilled financial adviser, you know that every financial plan is carefully designed to meet your client’s needs today, and as their life changes. BrightRock’s needs-matched life insurance lets you create a product solution that precisely matches the financial plan you’ve crafted for your client.
For example, we can offer your client up to double the capital disability cover on their current policy for the same premium, so they can afford the cover they need. With traditional disability products, your client’s cover is designed to offer the lowest level of cover today, with the promise of more cover in the future. It’s priced to keep growing, even when your client is close to retirement and needs far less of it.
We cut out this waste, without compromising on meeting your client’s needs, giving them up to double the disability cover for the same premium now.
Only with needs-matched life insurance do you have unrivalled flexibility and efficiency, so that your finely crafted financial plan becomes an enduring masterpiece in your client’s hands.
Get the first ever needs-matched life insurance that changes as your life changes.
Unlocking brand value: Understanding share price discounts in equity analysis
BY OLIVER SCHMITZ MD Brand Finance Africa
In the dynamic world of investing, understanding why a company’s shares trade at a discount compared to key benchmarks such as comparable company multiples, analyst target prices, or Net Asset Value (NAV) is essential for making well-informed decisions. Several factors contribute to these discounts, and brand valuation, coupled with assessing intangible assets, plays a crucial role in addressing these complexities.
Brand valuation entails evaluating and assigning a financial worth to a company’s trademarks and associated intellectual property. Robust brand valuations incorporate marketing insights, including data on brand health tracking, alongside strategic plans and financial projections across various products and markets in which the brand operates.
This comprehensive assessment establishes a quantifiable financial value for the brand, providing actionable insights not just for improving the brand itself, but also for optimising overall business strategies.
Here, we outline eight challenges that brand owners commonly encounter and demonstrate how brand valuation can provide solutions to unlock sustainable value.
Market sentiment
Investor sentiment plays a crucial role in influencing stock prices. When negative sentiment arises due to issues with a company’s reputation, business performance, or broader economic uncertainties, investors may hesitate to pay a premium for its shares.
Solution: Brand valuation serves as a tool to identify critical brand and reputation indicators that impact the company’s ability to attract and retain profitable customers, influencing its medium-term business performance. It also functions as an early-warning system, flagging potential challenges and guiding strategic decisions to enhance future value.
“This approach ensures the company is well prepared to capitalise on favourable market shifts by showcasing its competitive advantages”
AND ANNIE BROWN GM Brand Finance PLC
By demonstrating the strength of the brand relative to its competitors, it provides reassurance to investors and stakeholders, especially in challenging sectors. Our analysis indicates that companies with robust brands achieve growth rates 1.7 times higher than the overall market.
Poor performance or financials
When a company experiences financial struggles, declining revenues, or operational difficulties, investors may become hesitant to pay a premium for its shares, resulting in a discount to its Net Asset Value (NAV).
Analysts may also lower the company’s target price based on these issues and the prospects for recovery.
Solution: Brand valuation identifies specific areas where a company’s brand and reputation are weaker compared to its competitors, directly influencing its business performance. This analysis offers actionable insights for stakeholders to address financial challenges through enhanced marketing strategies and improved brand management.
Research indicates that a one-point increase in brand consideration can lead to a sales increase of 0.5% to 1%. Moreover, brand valuation uncovers opportunities to generate cash, such as through brand licencing in new markets or product categories.
Leadership and governance issues
Problems with leadership, such as lack of confidence or concerns about corporate governance, can cause the market value of shares to trade at a discount relative to value indicators.
Solution: Brand valuation goes beyond assessing leadership issues to provide insights that reassure stakeholders about the overall health of the business and mitigate the short-term impacts of leadership deficiencies on the company’s reputation and brand.
In cases where leadership challenges persist, brand valuation offers a clearer assessment of their long-term implications for the business, supporting proactive governance and risk management efforts. It also quantifies the potential financial impact of poor governance.
For instance, in the case of Nissan, despite its CEO being fined $37m for financial misconduct, the overall reputation damage was estimated at $9bn, resulting in a decline in brand value from $19bn in 2018 to $10bn in 2023.
Market conditions
General market conditions and economic factors exert significant influence on stock prices. During a bear market or economic downturn, investors often seek greater discounts to compensate for perceived risks, resulting in shares trading below their actual value.
Solution: In such challenging market environments, highlighting the value of intangible assets and brand strength positions a business strategically. This approach ensures the company is well prepared to capitalise on favourable market shifts by showcasing its competitive advantages, which promise long-term returns beyond short-lived market fluctuations.
Strong brands also mitigate risk, leading to lower financing costs and reduced valuation discounts. Research indicates that companies with strong brands can secure financing at an average of 2.4% lower interest rates when compared to their peers with weaker brands.
Market mispricing
Shares occasionally trade at a discount due to market mispricing, which can stem from temporary inefficiencies or a misunderstanding of the company’s actual value.
Solution: To address this, brand valuation compares the business’s value against market and analyst targets, identifying opportunities and providing insights to correct mispricing.
Sometimes, shares may trade at a discount due to market mispricing. This could result from temporary market inefficiencies or a lack of understanding of the company’s true value.
Asset composition
The composition of a company’s assets can impact the discount applied to its Net Asset Value (NAV). For example, if a substantial portion of assets is illiquid or difficult to value, analysts and investors may apply a discount to the NAV to reflect this uncertainty.
Solution: To mitigate such discounts, accurately valuing brands and intangible assets, often undervalued due to misunderstandings, removes third-party estimations and improves the perception of overall assets. Including the value of intangible assets in the notes to financial statements, particularly brand value, mitigates concerns and enhances analyst and shareholder confidence.
Liquidity concerns
Concerns about asset liquidity can drive down share prices.
Solution: The growing market for acquiring brands and related intangible assets, such as websites, relies on having reliable valuations of these assets.
Distribution policies
Choosing to retain earnings rather than distributing dividends can potentially reduce share values.
Solution: Brand valuation, alongside the valuation of intangible assets, demonstrates how strategic reinvestment of retained earnings can create asset value over time, ultimately delivering long-term benefits to shareholders.
Future wealth creators: Opportunities in a new era
BY CLYDE ROSSOUW Head of Quality at Ninety One
The market is currently dominated by a small group of well-resourced tech players: the Magnificent Seven and the companies that feed their ecosystem. As in the dot.com bubble, an impressive narrative supports these stocks, centred on how tech will change the shape of the market forever. But active investors should be careful about expecting the status quo to hold indefinitely.
An inflection point in the shape of the market?
Over the past three years, if you had bought anything with growth and a rising share price you would have done well. The old adage of ‘buy low, sell high’ has effectively become ‘buy high and hold’, on the basis that somebody will buy what you hold today at a higher price tomorrow. Put another way, today’s market is very momentum driven. What has mattered less, to the stock market at least, has been the quality of companies. But the growth-andmomentum trade will stall at some point, and there will not be a warning bell. This is why it is important to be diversified – not just in sectors and regions, but also in equity styles.
The inflection point may be approaching sooner than people think. Based on recent share prices, the Magnificent Seven have been whittled down to the Magnificent One: Nvidia. We don’t own the company in our Ninety One Global Franchise portfolio. Yes, we know its products are integral to gaming, data centres, language models, and so on. But the market is pricing Nvidia as a monopoly almost into perpetuity, and that is a risk. At some point, rationality sets in. This is why we like to own businesses in the sweet spot of their life cycles,
with a relevant product set and maybe not showing the most dramatic revenue growth, but still growing quite nicely.
Changing interest rates
A crucial question for active investors is what will happen when interest rates come down and the market rotates out of cash into harder-working assets. The exclusive ‘tech club’ has shown it can perform in both high- and low-interest rate environments. But for everyone else, rates are important, and what the stock market rewards may change.
“The growth-andmomentum trade will stall at some point, and there will not be a warning bell”
A key focus in our Ninety One Global Franchise portfolio is earnings growth, but it does not appear to have mattered much to the market recently. For the past five years, despite achieving considerably better earnings and downside protection than the MSCI All Country World Index (ACWI), we have underperformed the global equity benchmark. Over this period, the ACWI delivered 5% earnings growth, and a -23% drawdown during Covid, vs. our 10% earnings growth and -10% drawdown in Covid. Over the last 12 months, the ACWI delivered 6% earnings growth, vs. our 13%. And since the inception of Global Franchise in 2007, the ACWI has delivered 3% earnings growth per annum, vs. our 6%.
This highlights that the biggest source of return for the ACWI in recent years has been from the market re-rating. But what if the market turns, and we see a de-rating over the next 12 to 24 months? Where will that leave investors in terms of overall total return? We believe our superior earnings growth vs. the market should stand us in good stead.
Valuations
What of valuations? Looking at price-toearnings (PE) ratios as a measure, the Ninety One Global Franchise portfolio appears expensive versus the market. But we prefer EV/EBIT (enterprise value to earnings before interest and taxes). In our view, this is a more genuine measure of the value of an underlying business, as it tells the story of the whole balance sheet and neutralises tax impacts in different countries. On this basis, our portfolio is roughly the same value as the market.
On a forward-looking basis, we are forecasting an internal rate of return (IRR) of 9%. Given our prospective low doubledigit earnings growth, this means we are being deliberately cautious and building in valuation mean reversion to a lower level over time. But even if the shares do not de-rate, prospective returns could also be greater than what they are currently priced to deliver.
Recurring vs non-recurring earnings
Another feature of our portfolio that is different from the market overall is that over 60% of our companies’ earnings are recurring. Where Nvidia must sell a product to make money, our companies will continue collecting from earlier sales, which equates to a higher quality
of revenues. The remainder of our earnings are non-recurring (one-off sales, product-oriented or transaction-based). We like this balance as it helps reduce earnings volatility over time, and we see it as a distinct advantage if the market environment changes, which at some point it will.
Portfolio positioning: defensive, durable and dynamic
Today, a big part of our portfolio is defensive, i.e. made up of companies that can grow their earnings no matter the stage of the market cycle. These shares have been the worst performing this year as the market is not pricing in a recession. However, we think investors should not rule out a recession as there is typically a lagged response to higher interest rates.
The core of the portfolio is made up of durable companies – those that can grow at a double-digit percentage rate, and that exhibit very little sensitivity to the economic cycle. Given these attributes, these stocks tend to trade at a premium to more defensive stocks.
A small part of the portfolio is what we call dynamic. The shape of the market today is all dynamic or high growth. We like select dynamic companies but do not believe that a portfolio should be entirely made up of these kinds of stocks, as this is where valuation risk is most acute. Our portfolio construction aims to take account of a wide range of potential outcomes. After all, nothing lasts forever –and that includes the magnificence of the Magnificent Seven.
For investors, conducting thorough research is the key to making informed and lucrative decisions about which stocks to buy and sell. By developing a systematic approach to evaluating stocks, investors hold the power to unlock their potential and reveal hidden risks, paving the way for smarter investments and greater returns.
In today’s fast-paced financial landscape, the need for diligent research when investing cannot be overstated. Every decision to buy or sell stocks hinges on a deep understanding of a company’s financial health, market dynamics, and competitive position.
Whether assessing balance sheets for stability, analysing industry trends for growth opportunities, or evaluating competitive advantages for sustainability, thorough research forms the bedrock of informed investment strategies and aids investors in building portfolios poised for long-term success.
From research to riches: How stock analysis equals investment success
BY RUAN LANDSBERG Head of Education at Markets.com
• Balance sheets
Understanding company fundamentals
Investors must examine a company’s fundamentals to research stocks effectively. This involves scrutinising financial statements and key metrics to uncover the actual health and potential of the business. This thorough analysis can reveal hidden opportunities and pave the way for strategic and profitable investments.
Financial statements, such as income statements, balance sheets, and cashflow statements provide a view into a company’s financial performance, financial position, and cashflow generation and spending.
As such, reviewing revenue and profit trends, debt levels, cash reserves, and other key metrics is critical. This will allow investors to compare these figures to industry averages and competitors, and determine whether the company is performing well relative to the market.
It is equally important to assess the company’s business model, competitive advantage, and growth opportunities. A robust and defensible business model, along with a competitive edge such as proprietary technology or brand power, can propel future success. Evaluate the size and growth rate of the total addressable market to determine if significant expansion opportunities exist.
Lastly, investors should monitor the risks and challenges a company may face, such as economic downturns, new regulations, or disruptive technologies that could impact operations, and determine whether the company is well positioned to adapt to these potential risks.
Analysing financial statements and ratios
To determine if a stock is worth investing in, investors need to analyse the company’s financial statements and key ratios. These include:
• Income statements
An income statement shows the company’s revenue, expenses, and profits over a certain period. Look for consistent or growing revenue and net income. Declining revenue or losses could indicate problems. Compare income statements over multiple years to identify trends.
The balance sheet provides a snapshot of the company’s assets, liabilities, and shareholder equity. Analyse trends in cash, inventory, accounts receivable, debt levels, and shareholder equity. Look for a stable balance sheet with limited debt. High debt levels mean higher risk.
• Cashflow statements
The cashflow statement reveals the flow of cash into and out of the business. Investors should look for positive operating cashflow, which indicates the company generates adequate funds to run its operations. Negative operating cashflow could signal financial troubles.
Key ratios
Calculate ratios such as price-to-earnings (P/E), return on equity (ROE), and debt-to-equity (D/E) to determine if a stock is overvalued or too high risk. A high P/E could mean a stock is overvalued, whereas a low ROE or high D/E ratio indicates a higher risk. Compare ratios to industry averages and the company’s historical ratios.
By thoroughly analysing these, investors can determine whether a company has a solid financial position and valuation, and whether stocks have strong potential for long-term growth and stability.
Evaluating competitive landscape and market conditions
Effectively researching stocks entails delving into the competitive landscape and current market conditions to uncover strategic opportunities and potential for growth.
These include:
• Competitive landscape
Examine the company’s direct competitors by scrutinising their financial reports, product offerings, and market share. Assess how the company compares in terms of financial stability and profitability, product pricing and quality, customer loyalty, and brand recognition. Evaluate barriers to entry for potential new competitors.
Furthermore, consider potential shifts in technology, regulations, or consumer preferences that could influence
the competitive landscape. Seek indications that the company possesses a sustainable competitive advantage, which is crucial for achieving enduring success in the market.
• Market conditions
Begin by analysing the overall stock market and the specific industry in which the company operates. Look closely at key indicators, such as the trend in the stock market index and industry performance over the past one to three years. A rising market and industry trend generally indicate greater opportunities for stock price appreciation. Consider factors such as inflation and interest rates. Low interest rates typically boost stock prices, while high inflation can diminish the value of future cashflows and dividends. Economic growth is also crucial, where strong economic expansion and low unemployment signal a healthy market for goods and services, which benefits most companies. Moreover, consider consumer confidence and spending habits, where optimistic consumers who spend freely contribute to overall market prosperity and support company growth.
Evaluate how the economic and market conditions might impact the company’s revenue, costs, and overall stock price. Favourable economic conditions may present a strategic window for investment, suggesting potential growth and profitability.
Conversely, warning signs like economic slowdowns or market instability may indicate heightened investment risks.
Investing in today’s market isn’t merely about reacting to market trends but anticipating them through meticulous analysis. By embracing research as a cornerstone of investment practice, investors empower themselves to navigate uncertainties, seize opportunities, and ultimately achieve their financial goals in a dynamic global economy.
“Investors should monitor the risks and challenges a company may face, such as economic downturns, new regulations, or disruptive technologies”
Allocating capital to investments that grow South Africa’s economy
BY NAVIN LALA Old Mutual Alternative Investments
The formation of South Africa’s new Government of National Unity bodes well for the consolidation of state reform and pro-growth initiatives, including better-performing parastatals, such as Eskom and Transnet. Given that economic growth is essential to spur social development, now is the time to act.
GDP growth may not be the panacea to South Africa’s challenges; however, it remains the most effective way to improve livelihoods. To propel South Africa forward and unlock its growth potential, there are significant investment opportunities to strengthen the critical buildings blocks of its economy, while earning a meaningful return. This is the view of Navin Lala, client director at Old Mutual Alternative Investments (OM AIternatives), who says that over the past few weeks positive sentiment has swung significantly in South Africa’s favour, thanks to the formation of South Africa’s first Government of National Unity (GNU) since the 1990s.
“While South Africa is alive with possibilities, and enjoying improving investor confidence, the results of policy
“The programme endeavours to narrow the gender gap in business ownership and foster a more inclusive economic environment”
reform and pro-growth initiatives will undoubtedly take time for their effects to be felt in the real economy,” says Lala, adding that economic growth requires capital and specialist expertise.
He believes that the private sector, civil society, and the investment community all need to work together towards a common goal to unlock opportunities in the critical areas of SA’s economy.
Alongside more traditional forms of investing, he believes impact investing has immense socio-economic and financial benefits.
More jobs and better infrastructure
The main advantage of impact investing is that it can lead to job creation, business growth and inclusive economic participation. “Impact investments often target industries and businesses that create jobs, particularly in underserved communities,” comments Lala.
Another benefit of impact investing is that it makes a tangible difference in improving infrastructure, the backbone of the economy. “Investments in sustainable infrastructure, such as renewable energy, transportation and affordable housing, improve people’s quality of life and their access to economic opportunities,” he says.
OM Alternatives has almost R8bn in social infrastructure investments, including in schools, education and affordable housing, and approximately R65bn in economic infrastructure investments.
“South Africa has a lack of infrastructure, and deterioration of existing infrastructure. Investment into new bulk infrastructure capacity will be critical in pushing the economy to its productive capacity.”
Affordable education and housing
As well as supporting business growth, OM AIternatives is particularly interested in access to affordable education and housing. Two of its funds have this focus, namely the Education Fund (EduFund) and the Housing Impact Fund SA (HIFSA). “Affordable housing is more than just a shelter,” asserts Lala. “It plays a pivotal role in fostering social stability and creating vibrant communities.”
Moreover, having a good education is a powerful instrument for reducing poverty, he says. “It enables better absorption of employment in the economy, helping people break from the poverty cycle. It also leads to a more productive workforce.
“By pursuing an impact-investment strategy, pension funds can earn competitive real returns, while providing funding (debt, mezzanine or equity funding) to businesses and impact projects which may not necessarily be able to access funding through traditional channels,” concludes Lala.
Rising demand for cryptocurrency understanding and security among South Africans
Arecent research survey by DoshFX, a centralised South African crypto exchange, reveals a significant demand for improved understanding and enhanced security in the cryptocurrency sector among South Africans. The survey, conducted across various demographics, sheds light on the key barriers and perceptions that influence cryptocurrency adoption in the country.
The findings highlight that despite the growing global popularity of digital currencies, South Africans still face significant obstacles that hinder widespread adoption. These barriers range from a lack of knowledge and understanding to serious concerns about the security of trading platforms. Addressing these issues is crucial for the growth of the cryptocurrency market in South Africa and can potentially unlock new opportunities for financial inclusion and economic growth.
The survey results indicate that familiarity with cryptocurrencies remain relatively low, with only 34% of respondents feeling somewhat familiar with these digital assets. Two-thirds (66%) have never used any cryptocurrency trading platforms, highlighting a significant gap in practical exposure and experience.
When it comes to barriers to investment, a substantial 45% of participants cited a lack of understanding or knowledge as their primary hurdle. Security concerns are also prominent, with 27% of respondents worried about security and fraud, and an additional 18% mentioning a
lack of trust in the available platforms. These figures show the need for enhanced education and robust security measures within the industry.
Perceptions of safety further compound these issues. Half of the respondents (50%) are unsure about the safety of current cryptocurrency trading platforms, while 30% outright perceive these platforms as unsafe. This uncertainty and perceived risk deter potential investors from entering the market.
In terms of information sources, social media plays a dominant role, with 64% of participants relying on it to learn about new technologies and trends. Online articles and blogs are the next most popular source, used by 19% of respondents, followed by friends and family at 10%. This trend indicates the importance of leveraging digital and social channels to disseminate accurate and informative content about cryptocurrencies.
The survey also revealed a clear demand for specific types of content from cryptocurrency experts. The majority of respondents (60%) expressed an interest in educational articles and tutorials to help them understand the complexities of cryptocurrencies. 20% are interested in market analysis and trends, while 15% prefer interactive content such as webinars and live sessions. This data highlights the importance of varied and engaging content.
The cryptocurrency industry in South Africa is at a critical juncture. The data indicates a clear gap in public knowledge and trust, presenting both challenges and
opportunities for industry players. “There is an obvious need for comprehensive educational campaigns to demystify cryptocurrencies. Industry stakeholders should collaborate to create accessible, easy-to-understand resources that can help bridge the knowledge gap. Educational efforts should focus on explaining the basics of cryptocurrencies, how they work, and their potential benefits and risks,” says Davina Bemako, head of marketing, DoshFX.
Addressing security concerns should be a priority. The industry must invest in advanced security protocols to protect users from fraud and cyber threats. Transparent communication about the measures in place can help build trust in the company and trading in general among potential investors.
To overcome the lack of trust in cryptocurrency platforms, the industry must prioritise transparency and regulatory compliance. By adhering to high standards and engaging with regulatory bodies, the industry can enhance its credibility and reassure the public about the safety and legitimacy of cryptocurrency investments.
“In response to these insights, DoshFX will launch a comprehensive educational campaign aimed at enhancing public knowledge about cryptocurrencies. This includes producing high-quality, informative content and offering interactive sessions to engage and inform our audience. We are also committed to working closely with industry leaders to improve the security and reliability of cryptocurrency platforms,” Bemako says.
SARS goes after advisers
The Supreme Court of Appeal has backed Commissioner Kieswetter and issued a stern warning to all South Africans to refrain from assisting others in evading their tax obligations. Where you are caught, SARS will go after you personally. This is now settled law in South Africa, and directors or companies, tax advisers, lawyers, accountants, or even payroll professionals can find themselves on the hook.
The recent case involving billionaire Dr Wiese and his associates illustrates how the Supreme Court of Appeal (“SCA”) enforces the regulations of the Tax Administration Act, No. 28 of 2011 (“TAA”), demonstrating there is no escape for those who facilitate the evasion of tax obligations and, in particular, in dissipating a taxpayer’s assets where a debt is due to SARS.
Significant legal setback
Billionaire Dr Wiese and three other defendants, including a former Edward Nathan Sonnenbergs (“ENS”) executive, encountered significant legal setbacks when the SCA upheld a judgment against them in favour of the South African Revenue Service (SARS). The SCA agreed with both SARS and the High Court, affirming that further litigation is required to determine if the defendants knowingly obstructed tax collection. If found guilty, they will be required to pay a substantial sum of R216m to SARS. There can of course be a criminal element where SARS finds facts to support taking this all the way. However, there is also the possibility that the defendants may approach the Constitutional Court, who seems to have developed an appetite for taking on tax matters lately.
Understanding the tax debt
SARS approached the High Court seeking an order that declared the defendants, including Dr Wiese and a former executive of ENS, jointly and severally liable to pay R216m under section 183 TAA, which states:
“Tax practitioners, lawyers and accountants may end up liable for their clients’ tax debts”
“183. Liability of person assisting in dissipation of assets – If a person knowingly assists in dissipating a taxpayer’s assets in order to obstruct the collection of a tax debt of the taxpayer, the person is jointly and severally liable with the taxpayer for the tax debt to the extent that the person’s assistance reduces the assets available to pay the taxpayer’s tax debt.” (emphasis added)
SARS contended that the defendants knowingly assisted Energy Africa (Pty) Ltd (“the taxpayer”) dissipate its sole asset, a loan claim, to its holding company on 19 April 2013. This action occurred after SARS informed the taxpayer and its advisors on 16 November 2012 that it would issue assessments for the 2007 tax period to recover unpaid taxes. By 21 August 2013, SARS had issued additional assessments, including capital gains tax amounting to R453 126 518 (“CGT debt”) and secondary tax on companies amounting to R487 205 316 respectively (“STC debt”), plus interest and penalties. In September 2013, SARS was notified that the taxpayer lacked the funds to settle the tax debt. On 29 May 2014, a commitment was made to SARS that no further appeals would be filed, effectively accepting the assessment as accurate. By April 2016, the taxpayer had been liquidated and no longer existed.
High Court ruling
Initially, it was determined whether a “tax debt” existed under section 183 of the TAA before deciding the defendants’ liability. The defendants argued that the applicability of section 183 of the TAA depended on the existence of a “tax debt”, which they claimed did not exist until SARS issued an assessment on 21 August 2013, after the dissipation on 19 April 2013. However, the High Court ruled that “tax debt” broadly means “an amount of tax due or payable”, asserting that the CGT and STC debts should have been paid during the 2007 tax period, establishing a tax debt since then.
The SCA’s confirmation
On appeal, the SCA confirmed that a tax assessment does not establish or impose a tax liability, as the liability exists by law, regardless of an assessment. The purpose of section 183 of the TAA is to hold third parties accountable who deliberately obstruct SARS from collecting a tax debt. While this judgment clarified the meaning of “tax debt”, further court proceedings will determine if the defendants knowingly assisted in the dissipation of assets to obstruct tax collection. If proven, section 183 of the TAA will apply, and the defendants will be jointly and severally liable to pay the tax debt to SARS.
Key takeaways
The SCA’s judgment serves as a stark warning to tax advisors, lawyers, accountants, and company directors. We now have absolute clarity that a tax debt exists independently of an assessment, and under section 183 of the TAA, any third party, including tax advisers, lawyers, and accountants who deliberately impede the collection of a tax debt by assisting with the dissipation of assets, cannot evade responsibility by arguing that an assessment was not yet issued.
This case underscores the serious implications for professionals involved in tax planning and advisory roles. It emphasises the need for due diligence and ethical conduct to avoid falling foul of the law and facing substantial financial and legal consequences.
Understand the claims process for gap cover
BY MICHAEL EMERY Marketing Executive at Ambledown Financial Services
Ar ecent article in the Financial Mail makes it clear gap cover is becoming more prevalent. A key driver is persistent medical inflation, so the gap between what a medical scheme pays and what is charged is growing. One industry player says that monthly gap cover claims are up by R1m compared to previous years.
Another major factor is the cost-of-living crunch, which is seeing many people opt for cheaper medical schemes with lower benefits, leading to a greater reliance on gap cover. Ambledown’s average gap claim for an insured event is R9 409.12.
Whatever the causes, gap cover has never been more important when it comes to protecting members of medical schemes from financial disaster when hospitalised or requiring specified outpatient procedures.
With that in mind, understanding how the claims process for gap cover works is essential to ensure payment is made quickly and that claims are not rejected. Here are the main points to be aware of:
` Read the policy document and make sure you understand your benefits. Working with a trusted broker is an excellent way to ensure you claim for all the benefits to which you are due, and that a claim is valid. Claims will only be considered if they fall within the particular policy’s benefit structure.
` A key point to remember is that if a claim is declined by the medical scheme, it is not eligible for gap cover. Gap cover is not a medical scheme, and the cover is not the same as that of a medical scheme. Gap cover is not a substitute for medical scheme membership. Other reasons for a claim not to be paid include waiting periods when a policy
“Gap cover has never been more important when it comes to protecting members of medical schemes from financial disaster”
• Detailed accounts from all the service providers whose shortfalls you wish to claim.
is signed or upgraded, or if there was a pre-existing condition as defined in the policy within the first 12 months of the contract. The duration of any waiting period can vary between policies and insurers. Some policies might waive waiting periods for certain conditions or
under specific circumstances.
` Submit all the right documents. Incomplete claims submissions are a common mistake. Every claim for gap cover must include:
• A fully completed and signed claim form.
Detailed hospital account.
• Detailed medical scheme statement.
All this detail is necessary because the gap cover covers the difference between what the medical scheme paid and what was charged for in-hospital treatment and defined out-patient treatment. If there is a co-payment as well as a gap claim, each claim is assessed separately line by line.
Ensure the claim form is signed wherever indicated
Submit any claim within the time limits stipulated in the policy. Typically, claims should be submitted within 180 days from the first day of treatment.
Keep up with new developments in claims. If your insurer has an app, the claim can be tracked very easily. The onward march of artificial intelligence looks set to make the claims process smoother and ultimately faster, too. For example, Ambledown recently announced AmChat, a bot that will allow clients to ask basic questions and receive feedback on claims. It is particularly useful in identifying missing documentation quickly. In the future, it seems likely that digitising the claims process will free up human agents to focus on claims assessment and complex cases, making the whole process quicker. More intuitive self-service options are also in the pipeline.
Gap cover is undoubtedly playing a bigger role in financial planning and, as ever, it’s very important to understand how it works.
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